DeFi needs more interoperability, not apps or infra | Opinion
DeFi has too much infrastructure and not enough apps—or at least, that’s what the consensus seems to be in crypto’s town square. Just this year, venture capitalists and private equity investors have poured hundreds of millions of dollars into crypto projects that make infrastructure a priority, if not an exclusive focus.
The highlight reel speaks for itself. In the first quarter alone, VC firm a16z committed $100 million to Eigen Layer, a restaking protocol and infrastructure layer for the Ethereum network; private equity firms Bridgewater Capital and Deus X Capital joined forces to fund a $250 million infrastructure platform; and RW3 Ventures raised $60 million for a fund focused exclusively on blockchain infrastructure and DeFi. These headlines are just a few of many; a quick perusal of any crypto news outlet reveals countless similar announcements.
Focus on infrastructure
The laser focus on infrastructure sparked considerable conversation during and following the Ethereum Community Conferences, or EthCC’24, in mid-July, with many coming to the same conclusion: We need more apps and less emphasis on infrastructure.
It’s a valid perspective on the surface. To put the issue into metaphor, focusing disproportionately on infrastructure is like building the best theme park ever seen—without the rides. Who cares if the park has nice paths, sleek gift shops, and well-equipped food stalls? If you don’t have a roller coaster (or five) on the premises, no one will show up, let alone pay to play.
Theoretical value and potential can only inspire so much customer adoption. A wide variety and deep volume of apps could help hook and retain DeFi users. With more options on offer, users will have more reason and opportunity to not only onboard but also explore.
The problem? Increasing the number of apps can only help the underlying issue (e.g., the long-term growth and sustainability of the DeFi ecosystem) so much. Returning to our metaphor, a good theme park needs a variety of rides to attract guests; however, if those rides are inconvenient to access or unpleasant to experience, interest will taper off sharply.
The real problem: UX
Here, we come to the real problem at the heart of the apps vs. infra debate: user experience.
To say that the DeFi ecosystem (and the emerging BTCFi sector in particular) isn’t intuitive for layperson users would be an almost comical understatement. Even seemingly simple acts such as moving assets between dapps in different ecosystems can become a time-sucking, frustrating exercise for ordinary users. Despite being fundamental to cross-chain transactions, bridging and swapping are virtually impossible for crypto newcomers to figure out without professional guidance. It’s hard to blame a layperson for giving up midway—or opting not to try in the first place.
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