I was born in a country that no longer exists – the Soviet Union – and I know first-hand what it is like to not have freedom of choice. There was no choice because of lack of competition and the only players in the market were not motivated to get better. Those privileged players knew that we would consume whatever they produced because we had no other choice. Lack of competition put us, the end user, in a helpless position.
The Soviet Union is an extreme example, of course, but for many years traditional banks have placed consumers in a similar situation. At its very core their services have not changed in centuries and high street banks stayed more or less the same until fintech emerged.
Now we finally have a choice for better alternatives such as the Monzos and Revoluts and many of us have welcomed them with open arms.
But things have gotten even better from there. Decentralized finance has emerged, promising many of the same products and services as neobanks, but with the added benefit of permissionless access. Now, anyone can play.
The development and growth of decentralized finance (which now contains over $40 billion in locked value) has been particularly impressive. But what’s even more impressive is how excited its developers, users, and proponents are.
Since the dawn of time, people have placed freedom as one of the most important values of humankind. For centuries people have fought for it and ultimate freedom has become a dream for many of us: the ultimate endgame.
Defi is also a story about freedom, since at its core decentralized finance is about breaking free from the traditional centralized authorities and gaining back control over our money. Now we have a better alternative to run in parallel with the legacy systems that have been shown to work against the interests of the common man.
Defi has created the gateway to financial freedom and now we have the choice of benefiting from it… or watching from the sidelines and missing out on major financial opportunities.
Things move so fast in the space that it feels like a giant roller coaster. More projects emerge every day and existing ones keep adding new services to their offerings. This healthy competition has in turn pushed innovation and prompted new talent to enter the space.
Imagine running the largest decentralized exchange in the world and then seeing a competitor emerge out of nowhere and cross $700 million in total value locked within three days. That’s what happened when SushiSwap emerged out of nowhere as a Uniswap fork, and stole its rivals’ users and liquidity in a ‘vampire attack.’
Since most defi projects are open source, with code that can be readily replicated, the above scenario can occur again and again. Which means that we, as users, will experience the opposite of what we were stuck with in the Soviet Union: rather than suffering an absence of choice, we are overwhelmed by it. It’s the equivalent of going to a supermarket and staring at 20 types of cheese not knowing which to pick.
Picking the right option isn’t easy. After all, we don’t want to miss out on new opportunities, and since things are constantly changing, we are prone to comparing available choices.
Because let’s be honest, we all believe that we deserve the best, right?
So when a direct competitor emerges, how do we know which one is the best? Should we keep jumping from one place to another in order to try everything? Do we have the time, the energy and the patience to go through all that hustle?
For most of us, DeFi is not our full time job (though for this lucky gal it is).
The solution to identifying the best DeFi products for our needs may lie in aggregator services that integrate best-in-class solutions, saving users from needing to shop around.
Unsure whether to trade on Uniswap or SushiSwap?
Well, turns out you don’t have to agonize over that one: there are services that will do all that for you. Plasma.Finance, for example, allows its users to choose between the two most popular decentralized exchanges on the market, incorporating them into its DeFi dashboard. It’s proof that DeFi protocols don’t always need to cannibalize one another and leech liquidity in vampiric attacks. When they work together to integrate one another’s services, beautiful things can happen. Everyone prospers and no one bleeds out.
It’s hard to imagine rival banks cooperating in this manner, let alone the Soviets of my youth. But in DeFi, rival platforms have more commonalities than differences. They share a common foe in the form of traditional finance, and those who would seek to stop global citizens from accessing the tools for financial freedom.
By working together, DeFi projects can build synergies, accelerate adoption, and form a symbiotic relationship in which they are stronger than the sum of their parts.