The Q Protocol is the new symbol of maturity for the application of the International Court of Arbitration’s regulation to DeFi disputes.
Specifically, the Q Protocol represents a significant step in the development of the sector, allowing developers to process organizational constitutions implemented through smart contracts.
In addition, these constitutions also include off-chain paths for dispute resolution beyond the management capabilities of the code. Let’s see all the details below.
Q Protocol: Creating Organizational Constitutions with Off-Chain Solutions for DeFi Regulation
As anticipated, Q Protocol will adopt the regulation established by the International Chamber of Commerce (ICC) arbitration court for dispute resolution and decision enforcement, as indicated by Nicolas Biagosch, co-founder of the protocol, in an interview with CoinDesk.
We remind you that Q Protocol offers blockchain governance services for Web3 and decentralized autonomous organizations.
In addition, the protocol allows developers to create organizational constitutions implemented through smart contracts, including off-chain paths for dispute resolution beyond the management capabilities of the code.
The constitution of Protocol Q defines the rules of the system, including the use of the International Court of Arbitration, which has been active for over 100 years.
Historically, dispute resolution has been a problem in decentralized finance (DeFi).
For example, the clash between the Aragon Foundation and a group of activist investors led to the closure of the foundation and the transfer of $155 million in assets to ANT token holders.
Nicolas Biagosch has indeed declared in this regard that: “We would have had a solution to the Aragona dispute.”
ICC and Q Protocol: all the details about the plans for DeFi dispute resolution
The rules of the ICC are often used to conduct private arbitration as they tend to be faster than jurisdictions based on national states. Alexander G. Fessas, Secretary General of the International Court of Arbitration, stated that the Court has already handled disputes related to blockchain.
Although it is not the first time that disputes in the context of DeFi can use the framework offered by the ICC, the credibility given by the world’s leading arbitration institution gives unprecedented status to the space.
Fessas has declared the following:
“Our mission is to ensure access to justice and the rule of law, and our goal is to assist parties in resolving their disputes.”
The participants in the Q ecosystem (thirteen projects have signed up to use the services) are part of the private contract represented by the Q Constitution.
They have also agreed that the Arbitration Court of the ICC, based on the Q Constitution and its procedural rules, will be the sole mechanism for resolving disputes, rather than an alternative judicial system to that of nation-states.
Biagosch has specified that the ICC will always reserve the right, according to its rules, to not examine the case and that the resolution of disputes cannot be forced.
In addition to dispute resolution through the ICC, Q Protocol also offers a decentralized discretionary decision-making process and the decentralized application of rules beyond code as law.
The Q Protocol mainnet was launched in March 2022, and in addition to the signed projects, 123 DAOs have built their own organization on Q, an additional service available on the platform.
Capital locked in DeFi: reached $50 Billion, a 41% increase in six months
The total amount of capital locked or staked on all decentralized finance (DeFi) protocols has recently surpassed the threshold of 50 billion dollars, marking a significant increase of 41% in six months.
The increase has been driven by the rise in the value of underlying assets and the interest of investors in securing returns on their cryptocurrencies.
According to DefiLlama’s data, since mid-October, when the sector was at multi-year lows, locked capital has grown by 15 billion dollars. The search for yield has been evident with the recent success of the layer 2 project, Blast.
This has attracted over 700 million dollars in deposits from traders and investors, despite withdrawals being possible only starting from March.
During the same period, Ether (ETH), the main cryptocurrency used in the DeFi market, recorded a 42% increase, surpassing the overall 41% increase in the DeFi sector.
It is interesting to note that many DeFi protocols offer yields on stablecoins, anchored to traditional fiat currencies.
The volume of transactions has also recorded a significant increase, exceeding $5.4 billion in a single day last month, the highest since March.
The sector’s momentum has been further fueled by Ethereum’s transition to a proof-of-stake blockchain, which has incentivized the liquid staking market, dominated by Lido and RocketPool, responsible for 45% of the total locked capital (TVL) in DeFi.
Lido and RocketPool offer annual yields of 3.7% and 3.92% respectively through liquid staking, a form of derivative that allows investors to generate returns from staking ether.
Meanwhile, protocols based on Solana, such as Jito and Marinade Finance, have seen an increase in TVL between 60% and 120% in the last 30 days. This highlights a growing institutional interest in Solana.
The Grayscale Solana Trust has been traded at a premium of 869% last month, indicating strong demand from the institutional sector.
Source: https://en.cryptonomist.ch/2023/12/12/regulation-the-application-of-the-rules-of-the-international-court-of-arbitration-in-defi-disputes/