YAP Cast

YAP Cast S2E1: Law & Money With Hart Lambur, UMA

What are we talking about when we mention terms such as Digital Currencies and Decentralised Finance? Money. This episode of YAP Cast embarks on a journey to discover how money’s relationship with law can evolve to be globally seamless.      

Helping us do this is Hart Lambur: Co-founder of UMA: an Optimistic oracle built to query and verify data for decentralised finance (DeFi). From finding his way in banking to experiencing a crucial moment in financial history, to finding solutions to centuries-old problems, Hart has had a truly intriguing journey. 

An Old and Problematic System

Most new joiners in big financial companies are relatively clueless about what they are doing. Even for professionals- navigating and understanding its many nuances and niches is not easy. Some of the stuff that has happened in crypto recently is reminiscent of the collapse of the Lehman brothers. Parallels can be drawn between them based on how things happened. However, where the latter is unmatched is the fact that they had no idea about the risks, exposure, and effectiveness of their contracts. 

National legal systems are responsible for these contracts and ensuring that this mechanism works. International localisation of financial products-&-services: is the most crucial issue involving the traditional financial system’s place in the current world. It is interesting to understand these elements of our usual financial products and services. 

Smart contracts: a Game-Changing Solution

Those were some of the issues that led to Hart moving from high finance to DeFi. He wanted to see how this ecosystem could evolve. He speaks of pivotal points in his journey that led to his interest in smart contract platforms like Ethereum. A large segment of people had a similar thought of connecting financial contracts with a smart contract system. This thought eventually led to the start of DeFi as a concept and more specifically a term.

The discussion in this episode constitutes the logic, purpose, and execution of a smart contract. This further delves into how blockchain and economic incentives can be used instead of a legal system: to compel these counterparties to follow the terms of the contract.

A New System for a New Age 

The bottom-line is: it’s time to embrace an evolved way of dealing with money. A new legal system. A new method of contracting has become unavoidable. The new way must solve issues of financial jurisdictions. It should recreate finance with a global character. It needs to be seamless, permissionless, and barrier-free. ‘Money without borders’ is how Hart puts it. 

He speaks about how code can replace contracts & lawyers. If seen in a new light, this new system of contracting has a different set of trade-offs compared to working with traditional financial contracts. He finishes by talking about how exciting and rare this system is: since they haven’t invented a new form of contract in the last two centuries. 

Hart’s thought-provoking journey has taken him from the financial apocalypse of 2008 to reimagining how one party seals an agreement with another, and how that agreement/contract is executed. 

The next episode will pick up from where we left here, and explore how this works, or doesn’t, and what this all means.

Find out more about UMA here.

Follow Hart Lambur on Twitter here.