Money Reimagined: How Ethereum 2.0’s ‘Lock Up’ Will Drive DeFi Innovation

Money Reimagined: How Ethereum 2.0’s ‘Lock Up’ Will Drive DeFi Innovation


The “Summer of DeFi” might be over, but a looming event will give DeFi engineers a great incentive to crank up their “lego” innovation model and build more decentralized finance products: the Ethereum 2.0 upgrade. (See CoinDesk’s explainer here.)

With thousands of Ethereum 2.0 validators expected to stash more than 500,000 ether in a restrictive multi-year lockup, there will be significant demand for a creative solution that unlocks the value of those funds without undermining the upgrade mission. DeFi innovators will be happy to oblige. 

It’s a process of demand and supply that’s similar to how Wall Street’s “engineers” respond with new financial instruments when rules imposed on traditional markets put constraints on investors. It matters not that the behavior-constraining rules are imposed by a government regulator or, in the Ethereum 2.0 case, by a protocol. Constraints create an incentive for financial creativity.

Also, as with many Wall Street inventions, this one will create

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