What I like about Defi
My first leap into Defi is enticed by the cutie icons. I can guess which country and culture the team is from by the design. There are clearly two kinds of styles in the market, the Asian cutie and the western techie. Taking a toll on BSC’s ecosystem gives me the same feeling as walking around in Kyoto’s tourist souvenir shops. I could not stop touching and bringing home those cute stuff.
If the attractiveness of a crypto’s look&feel has something to do with people’s investment decision is an exciting subject to study, at least in my case. 😊 Apart from the emotions triggered by the cuties, the experience I have in Defi so far tells the distinctive benefits that it can bring to human beings. Now I have something meaningful to justify my risky behavior of investing in the wild-west cuties.
1. You get what you see.
In crypto, all projects are open source. Not open, no adoption.
In the current internet, mainstream software and applications are proprietary, absolutely restricted to make public.
When you decide which project to invest in crypto, you have the open information to conduct your own research. What you see is basically what you get.
In current internet, the sources of information to evaluate a project are the project’s salesperson, marketing materials, and, if there are, other users’ comments.
2. Anonymous and transparent co-exist
In the decentralized internet, a user’s identity can be completely anonymous. A user is represented by the public address of a wallet or different wallets. BUT, each address’s transactions are fully and publicly registered on the block explorer. Each user has all the transaction history natively available, and public! Each transaction is confirmed by the decentralized blocks, meaning that it is impossible for falsification or modification.
While I can’t poke around super rich’s Swiss bank accounts, checking whale (big investor) ‘s transactions on block explorer is just one click away and undoubtedly entertaining. I can even study the whales’ investing strategy so that I can adjust mine accordingly.
Since all the on-chain data are accessible, and there is no need for data intermediary, the implications of data transparency and accessibility for business or research purposes are very far-reaching.
3. Decentralization means power belongs to everyone.
The legacy internet needs (back up of) data centers and servers for its functioning. Such business is usually a million-dollar deal between the provider and the client.
A blockchain needs developing blocks for its functioning. Anyone equipped with necessary requirements, a mining machine for Proof of Work, some tokens for Proof of Stake, can participate, and each contributor gets his rewards. A decentralized network eliminates the possibility of single point of failure while benefiting anyone who is contributing.
A crypto token gives the hodler (holder) the right to vote for important (and less important) decisions. I was thrilled the first time I voted for the monetary ($CAKE) circulation policy and deflation mechanism. Never in my life I’ve thought I could take part in a central bank decision! I encourage economy undergraduates to participate in crypto. It can be a fun practice to apply the macroeconomics principles in “real life.”
4. Trust technology, people, or both?
In Defi, there is no contract, no compliance and even no identified team.
I like doing thorough research about the project I plan to invest in, reading white paper and revisions, investigating tokenomics, participating in the community, and starting with small money. I care more about how the team manages the project than the price’s short-term up and down.
Unfortunately and fortunately, I’ve been through two hacks of the protocols I’m investing in and come out alive. As a matter of fact, the crisis is a moment to better evaluate the team’s ethics and capability. I may write an article or two about this fascinating (somehow terrifying) experience. Being in Defi needs always monitor, learn and adjust. It is excellent for people who like constant learning and trying new things and have a certain tolerance level towards risk.
Apart from all the differences from traditional finance from the technical and financial perspectives, I want to add that since there is no pre-determined agreement between the project and the users, you may encounter wholly new situations either good or bad, from constant changing APY to some “life or death” questions. I’ve been asked to vote whether to mint tokens to compensate who invest in Beefy where a developer made a mistake and sent tokens to a non-retrievable address, causing users to lose all the fund invested. When there is no legal contract to govern, it relies on people’s consciousness and ideas to solve (unexpected) problems.
It is so technological yet so human!
