DeFi Needs Accountability and Structure

Right now, DeFi is currently plagued by quite a few issues. One of those being the fact that most projects are held together via ponzi-nomics and don’t offer much if any true utility or anything that generates true revenue outside of new users funding early backers of a project.

I personally do believe DeFi is a revolution and will change the world of finance in the long run, but right now, we are so early, and there is a lot broken with the current system.

I’ve been deep in DeFi for over a year and have personally reviewed at least 250 whitepapers of projects and fully reviewed over 100 projects.

Over the past 6 months I have been building a structured attribute system that helps fully evaluate a DeFi project and whether or not it can be something that is sustainable long term, or if it is another ponzi scheme where the builders or early investors are looking for a quick money grab.

I’ve broken DeFi down into 4 Pillars(Security, Innovation, Communication and Team)

Each one of these pillars has sub attributes which I have weighted based on importance. All of the attributes total out to be worth 100 points.

Every project I evaluate, is rated as follows:

**80% or higher = PASS**

**60%-79% = NEUTRAL**

**Below 60% = FAIL**

I personally believe I have probably reviewed more projects in DeFi than just about anyone, I understand what to look for and can usually quickly spot the difference between a dud and a stud.

I created a website, that houses these protocol reviews and provides my additional comments on each section, we just launched but have already completed 3 projects and are looking to continue to do more. I’d love for you to give it a look and provide feedback if you have it: [

Hopefully you can use the scoring rationale I created below to help evaluate projects on your own, or check out my site to see how we scored projects you may be interested in.

My goal with this business is hopefully to have future projects use this scoring rationale to help guide them when creating and know what they need to do to build truly sustainable and great businesses in the crypto space. Hopefully this helps bring structure and accountability to the space.

If you have some projects you would like to see me review and put on my website, let me know what they are in the comments! Thanks!

[BreadBytes Scoring Rationale](

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7 thoughts on “DeFi Needs Accountability and Structure”

  1. Have you heard of PadSwap? I function as a liaison for new projects and a volunteer community manager over there. It would be cool to see what you think of DPLP and some of our other systems. It’s all proprietary and solves issues around rugpulls without locking tokens.

    https://docs.toad.network/

    Reply
  2. This is awesome. The website looks good. But need more clarity with the content & branding. A) It’s tough to know what industry it serves for a new visitor. B) The tagline should be focused on problem statement along with right context. Same with social media
    Apart from this, I was wondering about the technical side.
    A) How do you screen a project? B) Where do you collect data about the project?

    Reply
  3. I see you’ve rated for things like multisig, and timelock and that will bias against defi protocols that run on their own chains (appchain) for security like osmosis or thorchain rather than relying on contracts. KYC does not in itself add any security, and is an unusual requirement for defi. Contract audits can range from completely useless, to very helpful. Often these are used as box checking and mean nothing because they are less than thorough.

    Token utility biases towards protocols that use a token which not all do (atomic swaps for eg). Teams should be rated by delivery over promises. A whitepaper is far less meaningful than constant high level code and feature delivery.

    Arguably doxxed teams are a protocol liability should regulation come down the line. In terms of sustainability, there doesn’t seem to be any analysis of the economics. Some protocols are massively inflationary and prone to death spirals – bancor’s recent shutdowns, and luna both come to mind. That should certainly be an important part of the analysis, as it’s one of the most important elements.

    There’s no place for insurance (which some protocols have, like thorchain), nor security mechanisms, like protocol shutdown mechanisms.

    Broadly, I’d say you’ve biased your rankings towards a particular type of design and particular expectations of how that will work. When a protocol falls outside of these expectations it’s rating will suffer despite potentially being more sustainable, secure and reliable than a better rated point of comparison.

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  4. i think that crypto is in its infancy and radically different, if we start calling for regulation now we will end up with the same corrupt and biased towards the wealthy setup that is wallstreet finance

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  5. DEFI needs upgrade security measures for protecting user funds and not every day we experiment a new hack in those DEFI

    still are high risk for big capitals not worth it, thats my idea, better cold storage, DCA or trading

    Reply

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