The latter situation is quite possible.
Written by: Tom Schmidt and Mia Deng, both at Dragonfly Capital
Compiler: Perry Wang
Brothers, we are done! The total lock-up amount (TVL) of decentralized financial DeFi reached USD 10 billion . We were in Bloomberg, Wall Street Journal, Financial Times. Everyone is adjusting to enter DeFi. We did a great job, right?
Maybe it’s a bit ironic, but I think most people clearly see, DeFi is still in its early stages. Whether it is to see the number of users, or will go to the center of the Exchange (DEX) and the number of centralized Exchange (CEX) were compared, or are looking for real, with cases of non-speculative, DeFi has been small scale, but still need to develop .
We ignore what many technical barriers to DeFi products and spread to the mainstream audience, pretend that we can wave their magic wand you can dream come true, to achieve a low-cost, fast transaction and a large number of products to attract mainstream demand, assumptions about the ecological mature DeFi What will the system look like?
In a vision of the future vision of, DeFi …… still a small minority of the system! A small group of enthusiasts who have the same vision of DeFi continue to use a network of various protocols to trade and borrow. However, it is still limited to a small group of fans. We have previously seen a lot of privacy and protection to the center of the technology embarked on this path, because they were never able to overcome many of these problems and product availability solutions typically have.
Consider something similar to ham radio and the like: This has 2 million to the center of global users, amateur radio self-sovereignty. Technically speaking, it did do what it promised on the box, but I think the general consensus is that what we hope for DeFi is not the impact of amateur radio on the world. This is largely because of its Not enough popularity . One possibility for the future of DeFi is this: Uniswap liquidity providers (LP) and Compound lenders will hold small gatherings and chat with each other on online forums until their spouse asks why they waste so much time and money here Kind of garbage.
DeFi enthusiast gathering (approximately 2024)
Of course, there is another potential vision for DeFi’s future, which is the so-called ” decentralized supremacist dream .” By then, hundreds of millions of people around the world will realize that they have entrusted their financial situation to irresponsible central institutions for too long, and will scramble to transfer their financial lives to the chain. The distant relatives would come to ask how to install Metamask ; Infura became the world’s most valuable company overnight; in the end, everyone became his own bank and traditional financial institutions collapsed. It is conceivable that this is similar to the first scenario, but in this scenario, the tastes and preferences of consumers have changed, and there has been a wave of DeFi adoption that did not exist in the first scenario.
Unfortunately, I don’t think this will happen. We have seen time and time again that consumer tastes change extremely slowly, and consumer tastes will reject many complex functions of DeFi. Consumers pay attention to ease of use and convenience, rather than privacy or autonomy – this has been one of the themes of the Internet: Most people open access through managed services, protocols, and tools accessible. Think about it, use Gmail or use your own email server? Do you use Slack, a team communication tool, or run your own IRC server? The current status quo is a feature that has passed the test of time, and I think Web 3 and DeFi will still be effective.
Therefore, if users prefer to use some kind of managed or semi-managed solution, the question becomes: which one ?
Whenever a change occurs technical generational turnover, the relationship between the two groups of participants in the market will become tight: existing companies must decide whether to use this new technology to innovate and subvert their own, new incoming must quickly Grow so as not to be squeezed out of the game by giant opponents. Unfortunately, for these young upstart, the CEO read enough of the “Innovator’s Dilemma” Clayton M. Christensen’s (The Innovator’s Dilemma) a book, realize that this change is not a clear way. Sometimes existing companies will subvert themselves, but usually not.
In today’s world where existing companies cannot innovate and cannot adapt to these new DeFi challengers, over time, we may see the rise of services such as DeBank or Instadapp and provide some kind of semi-managed solution The plan is to provide mainstream consumers with services that are more suitable to their tastes. At the same time, there may be a centralized enterprise that still holds the Gnosis security backup key. Although the real DeFi idealists do not want to trust a third party, but the public just like the convenience but do not want the private key management, may eventually develop new semi-hosted solutions based on these products, such as secure multi-party computation (MPC), Or SGX- based solutions, such as En igma or Bitski , to cater to these new users. These products must also strive to win the thousands of users and many new users owned by centralized exchanges, and at the same time create these products for new users to accept and use.
Another possibility is that the world’s existing businesses innovate and adapt to these new DeFi challenger, is becoming increasingly clear: today’s large-scale centralized exchanges around Asia may become the winner. Centralized exchanges can use their existing large user base and infrastructure, and integrate DeFi protocols into new functions. In today’s world, consumer attention is becoming more and more important, which gives them a great advantage over DeFi new banks and interactive interface emerging companies, the latter two must strive to acquire new users from scratch.
For example, OKEx is one of the largest crypto exchanges by transaction volume. It has integrated MakerDAO and Compound as a lending option in addition to its centralized lending options. OKEx users do not need to dig out their own funds, just set up Metamask , do not have to worry about Gas congestion or any other troubles encountered by native DeFi users, and can easily enjoy the sweet fruits of DeFi. In the short period of time since its launch, it has proven to be very successful. An estimated USD 50 million in Compound protocol deposits came from OKEx, involving 2,000 accounts.
Or Matrixport example, which is one of the founders of the mainland bit cold and Ge Wu Ji Sheng creation of the largest asset managers mobile platform. Matrixport is a centralized encrypted financial application that provides lending and structured products to cryptocurrency holders, but they have recently tested the DeFi field by providing asset management products integrated with Curve liquidity mining. Users can perform CRV mining with just a few taps on their mobile phones without leaving the centralized experience of the Matrixport main application. Recently, they launched a product called ” DeFi Smart Pool “, which enables users to obtain stablecoins for mining by using non-ETH assets such as BTC as collateral to earn income. Matrixport automatically rotates to DeFi best performing opportunities. Although users give up control over the centralized custody and execution of Matrixport, in most cases, this trade-off is worthwhile for convenience.
Without laborious assumptions, it can be seen that this approach may also play a role in other DeFi protocols. In the center of the exchange has been competing for the hottest DeFi new tokens in their own currency trading platform, which of course required to obtain sufficient liquidity, market maker recruited into Bureau.
For many exchanges, especially second-tier exchanges, it is best to integrate with a DEX aggregator like 1inch . After any token is listed, it can give users immediate access to this token, and can usually provide more than a single centralized transaction The better price is just like the stable currency swap we saw on Curve . More products and protocols may reuse this operation manual, and then to synthesize futures asset class is true from the options. These centers of exchange may be slowly add more and more DeFi agreement, until they begin interface similar to the existing DeFi or purse, wallet and DeFi UI and try to replace the original center of the body. And these centralized exchanges can even integrate their own DeFi native competitors, just like we have seen 1inch Mooniswap in the DeFi world, and in the CeFi world, we have seen Binance use its own centralized automatic market maker Binance Liquid Swap .
Is this possible? is it possible? Absolutely possible. If history can be used as a reference, it seems that Chinese encryption companies are most likely to cross this gap and enter the DeFi field.
China breeds super platform. In the Internet era, and today’s micro-channel super platforms such as the US group was originally based on a simple face products appear.
Micro letter, for example, it was originally a chat application to extend the reach of financial payment, taxi, hotel reservations, and eventually become a complete small program platform. Meituan started as a Chinese version of Groupon, but it also slowly expanded its functions to more markets. In the West, people may use Yelp to comment on the business, using DoorDash express delivery, use OpenTable restaurant reservations, while the US group have included all these features, it is now a one-stop shop.
We can see a similar development path, that is the center of the trading platform developed into a super platform, first transaction, and now to extend loans to banks and other similar services. It does not require much imagination to foresee that they will integrate the underlying DeFi products as part of this “ super platform ”.
In the end this will boil down to a simple question: Can DeFi become CeFi? Or is CeFi eating DeFi ? Although DeFi is still in its infancy, with preliminary judgment and historical experience and lessons, the possibility of the latter situation seems to be greater than imagined.
