JPMorgan’s Centralized Version of Blockchain vs. DeFi Intelligent Automation Platform

7 min readJun 29, 2021

Today we’re going to be discussing everything from CyberFi (an intelligent automation platform) to what JP Morgan is doing in the repo market with their own blockchain ecosystem (although JP Morgan might seem like the antithesis, of the blockchain world.)

The whole point of crypto is proper verification and to prevent cycles like 2008, where you had these massive issues in areas like the repo and the real estate market. If you don’t understand the repo market (just to break it down) a lot of people refer to this as the plumbing of the financial ecosystem. So think about the plumbing system within your house not a lot of people are worried about what’s going on with their plumbing, they only worry about it when there’s an issue, and it’s the same with the repo market.

These things really only come to light, when there are massive issues. So it makes sense that JP Morgan and Goldman Sachs want to get ahead of these events before they actually transpire. So the repo market is essentially like this: you have Bank A and Bank B. Bank A has treasuries and bonds, Bank B has cash. Bank A wants to trade their treasuries and bonds to Bank B for cash. This happens on a daily basis so the liquidity in the repo market is insane, typically in a 24 hour period you can see a volume of $1 trillion dollars.

This system though is a bit archaic since they’ve been using the exact same methods for the past couple of decades. When you have a technology like blockchain where you’re able to verify all of these transactions, you’re able to update and see these real-time on a blockchain network. For example; seeing which banks have the treasuries, which ones have the cash reserves.

So this is what JP Morgan is focused on and they’re basically just creating their own blockchain network with Onyx and Goldman Sachs is also on board. A lot of these banks are realizing that Bitcoin and Ethereum are innovating way quicker than they are and JP Morgan actually hopped on the Ethereum bandwagon and is using part of that ecosystem.

“Goldman Sachs Group Inc. has joined the blockchain-based network created by JPMorgan Chas & Co. for repurchase agreements that use smart contracts and a digitized version of the U.S. dollar.”

JPMorgan’s CEO Jaime Dimon has previously bashed Bitcoin and claimed not to have been a crypto supporter, so it’s a bit ironic that he’s now creating his own blockchain ecosystem. In a sense though, one could say he’s ‘taking the best and leaving the rest’ as Abraham Lincoln once said.

Just as you have the SWIFT banking system attempting to be replaced by XRP. With SWIFT, all of the banks have to communicate with each other globally, which is a very outdated ecosystem just like the repo market. The inherent problem lies however in the entities themselves as what JP Morgan is doing is going from centralized finance to their own version of centralized finance based on underlying DeFi technologies.

JP Morgan is the antithesis of DeFi, but it’s interesting to see these top players in the market move in a similar direction because it confirms the trend. They’re confirming that blockchain is a great innovation, but they’re trying to use it to their advantage. So they’re still trying to keep it in their centralized ecosystem using the same tools that you have in Bitcoin, Ethereum, or Solana.

“Its first trade came on June 17, when it swapped a tokenized version of a U.S. Treasury bond for JPMCoin, JPMorgan’s internal representation of a digital dollar, according to Matthew McDermott, global head of digital assets for Goldman’s global markets division. He declined to give the value of the trade.”

Like we mentioned earlier, in the repo market where one bank is holding these treasuries and is able to issue them on the repo market there’s an interest rate (repo rate) that one bank is paying to the other. In this case, instead of just switching for U.S. dollars (a global reserve currency), they switched it from JPMCoin (their own version of a stablecoin).

The whole thing about the blockchain ecosystem is being verifiable, being open-sourced, all these different aspects, which are the complete opposite of companies like JPMorgan. The beautiful thing about blockchain is you’re able to pull the curtains back, and if this was occurring on any other blockchain vs. Onyx on a JPMCoin you’d be able to see the amount of the transaction.

Overall the fundamentals of the thesis here are that JPMorgan is using the tools of blockchain and cryptocurrency for their advantage, not the advantage of their clients.

“‘We see this as a pivotal moment for the digitization of transactional activity,’ McDermott said Tuesday in an interview. Unlike in the traditional repo market, the exact amount of time the banks took to complete the transaction was quantifiable. In this case, it was 3 hours and 5 minutes.

‘Knowing the precise time is a big step up from the current market, as is the way the collateral and cash are interchanged simultaneously and immediately,’ McDermott said.

‘We pay interest per the minute,’ he said. ‘We firmly think this will change the nature of the intraday marketplace.”

This is an important innovation with blockchain since with SWIFT these transactions are not processed per minute. If you’re sending a wire transfer from one bank to another (from Georgia to Switzerland for example) it happens very slowly.

In the case of decentralized cryptocurrencies if you were using the Solana ecosystem, or Polkadot ecosystem and sending one asset to another it doesn’t matter where it is physically in the world. Geographical location does not matter, though it does matter which blockchain you are using.

This is different however when you’re using Onyx with JPMorgan. The fact that they’re paying interest per minute highlights the importance of blockchain. While in this case, the repo rate would be the difference between the treasury and the actual cash (cash is the JPMCoin).

We would much rather see a DeFi project like CyberFi, which can do a way better job than JPMorgan since it is open-sourced and completely decentralized. Briefly reviewing JPMorgan’s official site for Onyx can explain why.

In another article, CEO Jamie Dimon states that Bitcoin wasn’t his cup of tea. We can question why he’s so focused on centralization vs. decentralization. Why are they using this tool of blockchain, when the whole point is to move from centralized finance to decentralized finance. In order to move towards a much more open-sourced and equitable playing field for everyone around the world.

Including people in emerging markets, frontier markets, it doesn’t matter if you’re in Nairobi, Kenya, or Kuala Lumpur, Malaysia it’s the same playing field. This is the beautiful thing about blockchain, which Jamie Dimon seems to be going against. The article basically states he’s not a Bitcoin supporter, but that he wants to put it in their statements. So it doesn’t make much logical sense.

In natural law, Greek philosophers talked about the ongoing cycle of thesis, antithesis, and synthesis. The thesis for us is DeFi, the antithesis is JPMCoin and the banks. Now it may seem like we’re bashing JPMorgan, but you have to look at their objective, which you can actually verify on the blockchain! You can verify that JPMCoin is centralized and projects like CyberFi are decentralized.

What CyberFi is doing is actually incredible, it’s a DeFi Intelligent Automation Platform. You see all these different things you can do with trading like sending conditional orders and setting stop-losses. So think about putting this in the DeFi world. With DEX’s like Uniswap adding this as another layer on top, where you’re able to do more things based on conditions in the market.

This is more of a general overview of Cyberfi, and they describe their mission as a user-friendly DeFi experience, that adds a new layer of features available. So currently with whatever DEX or platform you’re using, it’s limited in the actual features you can use.

They also claim that users of the platform will experience zero stress, automated DeFi trading, farming, smaller fees, and tools for impermanent loss mitigation. An important thing as well is that they are interoperable and cross-chain capable.

The multi-chain factor here on CyberFi is that it will allow users to automate complex events and scenarios on BSC, TRON, Polkadot, and almost all other blockchains. Their automation provides features like multiple complex actions across farming, staking, liquidity pools, LP tokens through a visual programming interface. The beautiful thing about being cross-chain is that there are so many different options out there.

Contrasting this with what we wrote about earlier, if JPMorgan came out with their own version of CyberFi on the Onyx blockchain it wouldn’t be cross-chain and they would never allow you to switch to other decentralized ecosystems like Ethereum, or Solana. Being fundamentally decentralized and open-sourced however will ultimately ‘blow out of the water’ any centrally-based blockchain like Onyx. As we reviewed earlier in the article, JPMorgan is already hiding their transactions, but when you’re on any other blockchain you can see that the transactions are all open source.

Trading on CyberFi offers a platform that will bring users the functionality of centralized exchanges to decentralized exchanges and exchange liquidity pools. Price triggers can be used to automate trading and protect from DeFi volatility.

They also have a launchpad for developing new projects.

We’re curious about your thoughts so let us know if you agree or disagree with us ;)

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