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46 J. Corp. L. 909 (2020-2021)
Digital Asset Market Evolution

handle is hein.journals/jcorl46 and id is 953 raw text is: Digital Asset Market Evolution Wulf A. Kaal* The market for digital assets has evolved since its inception in 2009. Its rapid proliferation in 2016-18 was followed by significant downward corrections in 2018-19. The Article evaluates the central stages of the evolution of the market in digital assets and the affected market participants. It presents and compares market data for initial coin offerings, equity offerings, and initial exchange offerings in blockchain and digital-asset startups. The author examines data trends and their underlying causes in the evolution of the market for digital assets. Particular emphasis is placed on the emerging market for Decentralized Finance (DeFi) and its role in the evolution of digital assets. The article examines data to evaluate the feasibility of a DeFi market evolution in the decentralized market infrastructure environment of the early 2020s. I. INTRODUCTION............................................................................................................. 910 II. DIGITAL ASSET MARKET ............................................................................................ 913 1. B itcoin vs. A ltcoins .......................................................................................... 9 13 2. Initial Coin Offerings....................................................................................... 917 3. Venture Capital................................................................................................ 920 4. Initial Exchange Offers .................................................................................... 921 5. DeFi................................................................................................................. 923 a. Decentralized Exchanges (DEXs) & Protocols...................................... 925 b. Lending and Borrowing .............................................................................. 925 c. Trading........................................................................................................927 III. DIGITAL ASSET MARKET EVOLUTION ....................................................................... 927 1. Market Volatility .............................................................................................. 928 2. Funding Source Volatility................................................................................ 930 3. Challenges for Early Stage Investors .............................................................. 931 4. Regulatory Uncertainty ................................................................................... 932 5. Cyber Security ................................................................................................. 935 6. Crypto Economics............................................................................................ 935 * Professor of Law, University of St. Thomas School of Law (Minneapolis, MN). The author is on the board of directors of the Emerging Technology Association in Zug, Switzerland. He is also a founding member of the DevDAO and routinely advises digital asset businesses and startups, crypto hedge funds, digital asset exchanges, and policy makers. The author is grateful for outstanding research assistance from Hayley Howe and research librarian assistance from Nicole Kinn. The author did not receive any form of financial incentive for authoring this article.