The Revolution Will Not Be Reported Quarterly
It’s rapidly becoming clear that financial products built on open blockchains will change finance forever. The most obvious changes are the emergence of a new asset class, how you store those assets and how people and companies financially interact. Beyond that a whole range of less obvious but profound second order effects will follow. In this post I’ll explore the future of financial data; all the way from the data sources, to the data plumbers, quarterly reports and Wall Street analysts.
Financial data is currently siloed and expensive
Getting your hands on data from the legacy financial system is hard. Data is fragmented across different organisations and business lines and formatting is not standardised. The companies that do the hard work of gathering and cleaning the data can sell it at a high price to their clients. These clients are typically analysts at investment banks, hedge funds and the like. They take that data and turn it into useful analysis sold or utilised to serve their wealthy clients. Few get access and analysis is done in private so no one other than the inner circles benefits.
Blockchain data is open and free
Financial applications built on blockchains all have a shared backend which is open for anyone to monitor. If someone takes out a loan on the blockchain, anyone can verify that the loan happened, at least in theory. The data is not trivial to get, but it is available.
At Dune Analytics we’ve made access to this data easily readable and coupled it with a powerful analytics tool, all directly accessible for free on our website. This means that anyone can look at human readable data from the blockchain and turn it into dashboards with informative charts in a matter of minutes. You don’t need to be a developer nor have a fat stack of dollars to get going.
Wall Street insights sit at the firm level
The power of open financial data and tooling does not stop at the access level. While Wall Street analysts might work 25 hours a day, there are only so many of them, and they create closed analyses for the few clients that can pay a lot. This means that insights derived from the data grow at a linear pace at the firm level.
Crypto insights are globally compounding
With blockchain data and Dune Analytics, instead of starting with the knowledge of your colleagues or firm, you are literally starting from what thousands of analysts around the world have created already. Once someone creates a novel piece of analysis, anyone else in the world (!!!) can utilise it. They can fork it, remix it and make their own version of it. Hence the insights in the blockchain industry are compounding and growing exponentially instead of linearly.
Four months old data in PDFs
Digital products are real-time by default. Incumbent financial products, on the other hand, are not natively digital products. Remember, banks have “operating hours” online and payments can take days to process. Because finance is not natively digital, the use of digital products is decoupled from the economic activity (like revenue) generated from that usage.
In legacy finance the only thing you have real time data on is trading activity. Data on how products and businesses are actually performing at a fundamental level is reserved for quarterly reports, a process hailing from a time when information distribution ran on paper. Something that happens in early July is published four months later in October, a third of a year later.
Real time data dashboards
In contrast, financial products built on blockchains are truly digital. You click the button and the thing happens and that thing is economic activity. It’s not “wait three days” and then economic activity will happen. It’s a digital product, but for finance.
The implication is that you can see any piece of data live from the system as it occurs in a Dune Analytics dashboard. This is the equivalent of being able to see the usage of JPMorgan Chase’s product usage including assets and revenues and make trading decisions accordingly in real-time. Furthermore, the risks and solvency in these systems can be scrutinised by anyone without having to worry about fraudulent reporting as all the data can be easily referenced back to the blockchain.
Take a look at JPMorgan Chase’s Q4 report, there’s not a lot of detail: Active mobile customers up 10%, average deposits up 31%, average loans up 15%.
Meanwhile, you can look real-time into the financials of the Maker DAO lending system on Ethereum:
You can also drill down as deep as you want as all queries for creating these stats are open. For instance here are the total deposits in the MakerDAO lending system and the price of the asset, MKR, that has a claim on MakerDAO’s revenues:
Furthermore, you can get a full real-time overview of the whole Ethereum lending sector:
The living breathing quarterly report
We’ve come from a world of closed and expensive financial data that is reserved for a few privileged professional market participants. The insights produced are sold to a few wealthy clients, all in siloed environments. Furthermore the data available is very limited in scope, severely lagging, and impossible to fully verify. Insiders with connections, money and tooling easily get an information advantage over the broader public.
Dune Analytics, on the other hand, allows anyone to become a powerful open finance analyst without having to obtain access cards to skyscrapers in Manhattan’s Financial District. Dune is a living, breathing, customisable and collaborative
quarterly real-time report for blockchains and their associated applications. Insights derived from financial activity becomes a free and globally compounding resource where Wall Street suits have no edge over bedroom heroes.
Open data is yet another piece of the open finance ecosystem that facilitates exponential growth in investing, building and understanding at a pace that legacy finance will never be able to match.
At Dune Analytics we’re currently a four person team and are hiring software engineers remotely in ~CET timezone. If this post gets you excited you should check out our careers page.