Recently there have been several failing DeFi projects and businesses including Hodlnaut, Voyager, Celcius, and Terra. Naturally it brings you to the the question of which crypto businesses are doing Crypto correctly? In my search for answers I watched a video by Robert Sharrat CEO-Fluid Finance, who cautioned about choosing correctly and avoiding what he called shadow banks. He identified some parameters to identify Crypto business done right.

These are the parameters for identifying Crypto Done right by Robert Sharrat - CEO of Fluid Finance

1- Fee-based Crypto businesses are extremely stable

2. Ring-Fencing of depositors' assets, not Shadow banking

3. 100% fiat backing for Stablecoins, not unverifiable assets or algorithms.

How to spot crypto business done right is a video you need to watch.  you can see the full video here https://www.youtube.com/watch?v=w7DOy335ft4&t=870s

I find the Shadow Bank Concept intriguing. According to Robert -CEO of Fluid Finance, there are many Shadow Banks camouflaging as crypto and he name Celsius as one, he argues that there are several ways to test if a project is a Shadow Bank including

Do you control your money?

Can you verify where your money is on-chain?

And can someone do what they want with your money

All these things Celsius could do. He said any project that meets this equation below will fail

Failure formula = Unrealistic business model + maturity mismatch + leverage

According to Robert, if you get all the above parameters in any project after you DYOR, then it's likely a shadow bank camouflaging as crypto, and its potential going to fail, depending on how much the tide goes out. He makes several arguments and bold statements in his article which you can read in full on medium https://medium.com/@fluid_fi/the-celsius-deception-b441cb62c265

I find the Shadow Bank Concept very interesting and I thought to share it and see what others think about it.

The Test to identify a Risky Crypto Investment is to note that not everything that says they are crypto is, just verify-check all their claims on the blockchain and if it is not verifiable on-chain then its not crypto it is potentially risky says - Robert Sharratt- CEO, Fluid Finance

According to him, What Celsius was doing was not Crypto, it was fractional banking but worse because fractional banking is regulated; Celsius and many others escape regulation simply because they claim to be Crypto-Blockchains thus making them riskier than banks.

He continues with even more bold Statements, you can see the full interview in the video https://www.youtube.com/watch?v=w7DOy335ft4

Let me attempt a TL;DW Summary below.

1. Everything verifiable on-chain should not be regulated however everything off-chain should be regulated

2. USDC and USDT are potentially the biggest threat to systemic risk for crypto

3. They are not verifiable on-chain, yes they publish and say most is in cash

4. But the crypto way to do it is to simply hash everything on-chain

5. Or expose their treasury end-points on-chain for you to verify instead and this eliminates the risk

6. If you cannot verify everything a crypto claims on-chain then its probably risky

This is no Financial Advice Please Do Your Own Research.

Crypto was meant to be better, everything was meant to be transparent, verifiable, and permissionless to everybody; no blackbox. Yet in the bear market that is affecting both traditional banks, stocks and cryptos it is only crypto that is failing and depegging. How can this be

Today, I read an amazing piece by Robert Sharratt about what is wrong with crypto, and he hits it spot-on, I recommend you read it here - https://medium.com/@fluid_fi/b441cb62c265 .

In Summary, Robert concluded that just because it's on the blockchain doesn't mean it's a good business model; a bad idea, model or practice remains bad even on the blockchain. Then he made some predictions one of which is that Crypto will integrate seamlessly into the real world as banking databases transition to blockchain. And I can't agree less. If we can manage to keep bad-actors at bay long enough

Although Stablecoins can be collateralized by fiat currency 100%, digital cash is always an exchange of 1 fiat currency for 1digital equivalent more like a CBDC, in this regard every Digital cash owner is identified and associated with every particular digital cash, in other words, they are always account-based identity issued they are most suitable for bridging fiat to Crypto/DeFi but unlike Stablecoins they can never be unpegged, it simply does not matter because you will always be able to exchange 1 Digital Cash for 1 Fait currency it represents like
1USD: 1DigitalDollar
1Euro: 1 DigitalEuro etc.
Do you know anyone who does this other than fluid Digital Cash https://fluid.ch/our-products/digital-cash/?

Many people don't realize they have a trail of digital information on the blockchain. Anyone can find it and see what DApps you’ve used, transfers you’ve made, and the crypto assets you hold., with all the shortcomings Traditional Banking and Finance has been accused of no privacy is not one.

A claimed more advanced technology and platform should not have a privacy weakness.

BlockWallet fixes these privacy issues using battle-tested privacy-enhancing technology to protect your financial data. Cryptographic proofs (zk-SNARKs) allow users to make deposits and withdrawals using smart contracts that render funds untraceable. You can use BlockWallet to transfer funds to an address with no links to your history on the blockchain. Checkout BlockWallet