# Background

The current centralized financial system is broken.

• Centralized and siloed with legacy technology
• Opaque with asymmetric information
• Layers of inefficient intermediaries destroying value
• Dismal statistics for financial inclusion

Banks, insurers and other financial institutions have no reason to change. With endless direct and indirect government bailouts since the GFC, they have seen record profits at the expense of taxpayers, and we are now seeing the impact of the Fed’s infinite printing press with inflation taking hold.

Bitcoin was launched in January 2009 as a direct response to the events leading up to the GFC with the genesis block containing the text: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”

Ethereum was launched in July 2015 opening the floodgates of decentralized applications (dapps), but it suffers from issues of throughput and scalability requiring new approaches to financial services.

Uniswap launched a new kind of decentralized exchange in November 2018 where users interact with a pool of liquidity rather than directly with other users. This led to a wave of innovation in DeFi protocols, but each new protocol relies on having its own liquidity.

Solving this problem requires significant innovations in financial engineering.

DeFi holds the promise to solve these problems, but it is still in its infancy

Fledgling protocols for swaps, futures, derivatives, etc., have seen success, but they remain fragmented and cannot scale sufficiently for the needs of truly decentralized capital markets

We need better financial primitives as a foundation to build the next generation of decentralized capital markets.

$\int_{\mathcal{M}} d\alpha = \int_{\partial\mathcal{M}} \alpha$