Are we DeFi yet? In your dreams.
Sometimes you just have to get stuff off your chest and no amount of tweets is going to do it.
A non-insignificant percentage of the world sees the media reports of cryptocurrencies as coal fired ponsi scams and get rich quick schemes. Even well respected IT leaders don’t see value in it. Maybe they haven’t lived and breathed the world of finance for two decades?
I’m reminded of Blade Runner:
“I’ve seen things… seen things you little people wouldn’t believe. Attack ships on fire off the shoulder of Orion bright as magnesium… I rode on the back decks of a blinker and watched C-beams glitter in the dark near the Tannhäuser Gate. All those moments… they’ll be gone.” Lost like tears in the rain. —-
I see a deluge of scams and get rich quick schemes but look closely in that rain and there are hundreds of extremely interesting and cash generative projects.
In 2017 a new wave of people started dreaming of what could be. Many ran through their money or lost conviction along the way trying to turn their dreams into reality. But some managed to keep going past the despair of
will it ever be done? and put at bay the nay sayers and pessimists that said change couldn’t happen. Some had to half their project teams to get to the end or had to put their house on the line with extended mortgages. They had come too far to give up now.
It’s not easy when the world doesn’t believe. But gradually we have seen one or two of these 2017 dreams become reality. They defeated the odds and skeptics and managed to launch and survive and thrive.
And those projects, those concrete dreams are now the foundations for the next wave of dreamers to build upon. Each new defi protocol can be built on by others.
- The Maker DAI stable coin.
- uniswap reinventing how market making is done.
- Aave showing opening up collateralised lending.
- Nexus Mutual providing smart contract cover.
- Stop gap layering solutions like Polygon.
- Loopring, Optimistic, zk and aztec breaking new ground with L2s.
What you see here is the tip of the iceberg. These protocols are inspiring the 2021 dreamers to think bigger and build higher. These aren’t ponzi schemes (or are only as much as fiat and the london/NY and Tokyo financial markets are). They are cash generative which means they not only will weather the next storm, but they can invest in the next generation of dreamers making them more likely to be a success.
One. One success is all that’s needed. One new protocol that shows how to do something we couldn’t do decentralised before and that opens up so much new design space.
We’ve come such a long way since I last wrote about this space in 2017. The defi I had dreamed might be is here and is scaling up this year to levels the world probably isn’t ready for. But it’s the unexpected that brings me the most joy. I wasn’t expecting the Artists to be this soon or to be so profound, but they have moved into cyberspace and decided to own it. Projects like cryptovoxels are inspiring places where you never know if round the next corner will shock you or make you squeal with delight. They are pushing new boundaries with art and culture. In many ways I’m so glad this time around its the artists rather than the geeks that are defining this new metaverse.
But we’re not done yet. The haters still hate, they’ve not been, they’ve not played, they’ve not dreamed. Somehow, someway we will inspire them gradually one by one.
We need firm foundations as we’re going to be building high. The precoiners complain that ethereum is eating the planet with CO2 emissions. It’s noted. But almost all of the layer 2 ethereum solutions are Proof of stake today (or even more trustless than that). By 2022 the main chain will have gone green too. Job done.
Will we see other L1s?
IDK, a few, but the lindy effect of Ethereum is very hard to go against. But we have already seen that users who can’t afford (due to fees / scaling supply/demand) to be on L1 will be on the next best thing. Unfortunately that seems to be BSC at the moment. Gradually the less risky more decentralised solutions will be preferred over time. Any flaw is an attack vector. That constant attack leads us to stronger decentralised financial markets.
Consensus on Rules
Rules and consensus around globally defacto conventions are how the system will operate. With rating systems and screening to help avoid pitfalls. But some of the pitfalls are holes in the old system. DNS is a great rug pull for a start. We are already seeing more dreams built on IPFS and crypto secure DNS services, but it takes time to build so I think web3 will really take off a few years from now (2023?) even though things like audius are hear today and very cool.
We’ve hit escape velocity. Banks and Governments may try and slow it down but DeFi is the jini out of the bottle. Is it done? We are just scratching the surface. It will take a few years to get thousands of times bigger (How big? Imagine ETFs and that’s the minimum order of magnitude that DeFi will become).
As Mulder and Scully say “trust no one.”. By only having to trust the social consensus layer 0, we achieve this. I.e. we trust the collective
everyone so that we can
trust no one.
Tempted to become a dreamer?
Meterverse now - go explore a gallery: http://cryptovoxels.com/
Listen to Bankless podcast
Play with some DeFi protocols. Experience it yourself.