Everyone has their own opinions about the current state of DeFi. It’s not perfect by any means and a lot of things need to be ironed out before the technology is polished. What would you say needs to be improved about DeFi before it’s ready for integration with the masses?
32 thoughts on “What In your opinion is wrong with DeFi right now?”
Not really a defi issue, but crypto issue – private key management is too big of a responsibility for most people
I barely understand most of the products / protocols being built, and I work in the space. What hope do the normies have? It would be too complex with web2 mechanisms. Throw in 12 word phrases, exchange onboarding, MEV, and the sheer amount of degeneracy in the space and it begins to dawn on you that something is definitely missing if we expect the masses to buy into what we’re building.
It’s way too complicated to actually interact with dapps for most people to figure out. Also the average person has very little understanding of finance so the idea of being a liquidity provider or a fixed rate v floating rate loan is not gonna be intuitive to them. Let alone something like v3 uniswap
the taxes are too difficult to calculate. you can become a genius with the tax code and do everything manually in a spreadsheet, or you can get an expensive piece of subscription software that monitors everything you do and still gets it wrong somewhere. it’s a complete joke.
Other than overcollateralized lending, what value is it creating for people today? That one use case is something that’s really only valuable to people with relatively high net worth who, for whatever reason, don’t want to do the same thing against a portfolio of other, more traditional, assets.
Yields are all based on providing liquidity in one way or another – they can’t be the source of the value. And they still have to be subsidized by ponzi mechanics, price appreciation, or VC funds today.
DeFi feels like it’s a series of experiments with an enabling technology that hasn’t found a compelling value proposition for mass markets yet.
Short version: defi today is like a bunch of banks that have a 120% reserve requirement. Not a profitable/competitive model long-term.
I’m long-term bullish about blockchain technology, btw. There are promising areas and business models. Just not any that have “made it” and demonstrated a real market yet.
Definitely scalability. Blockchains just fundamentally cannot scale enough to find mass adoption for large amounts of transactions. And fees on popular networks are just too high to accommodate large scale adoption.
L2s don’t have enough liquidity/swappable tokens.
DeFi is lacking solid and safer earning methods. I have tried a few methods and am stuck stablecoin farming on flatqube.io. It’s good but would like to see more exciting developments for the whole sphere. This is one of the reasons that got DeFi its initial boom in popularity, so if there were to be a mechanic that benefits all sides while providing long-term benefits for investors, the sphere would rapidly gain popularity.
Regulatory uncertainty, user onboarding complexity, safety from hacks/exploits/rugs/contracts faults.
One of the benefits of centralized finance is you can deal with unintended actions easier. Get your account drained? You can get credited back and it’s more obvious where it went. On blockchain you don’t have that safety and I think that scares people
DeFi needs a legal layer to protect people from hacks and scammers. Q Blockchain does this.
Interoperability between chains. One token is one token on that chain. Bridge is complicated this reduce the development of complicated apps on L2.
Lack of regulations worldwide. This would speed up and help make DeFi safer.
From non regulatory perspective Impermanent loss in V3 Pools is too risky for an average user, you can hedge it with Squeeth, but this solution is still not perfect.
There’s still a lot of capital potential to be unleashed with right protocols allowing for collateralised debts, especially on Arbitrum and Polygon. Ethereum has them also very limited due to very high threshold as for average user.
It will probably be solved in coming year, because market don’t like loopholes.
Also solving Perpetual Protocols Pools risks would be great.
Interoperability, wrapping and bridging. Thankfully, DEX/DeFi blockchain platform [Zetachain](https://np.reddit.com/r/zetablockchain/comments/1376kop/defi_amm_platform_towerdefi_now_supports_twstzeta/?utm_source=share&utm_medium=android_app&utm_name=androidcss&utm_term=1&utm_content=share_button), is fixing that with the use of smartcontract for cross chain value transfer. Even for legacy chains like bitcoin that do not support smartcontract protocols.
Personally my hope is that as time goes on, more yougins will be able to adapt faster. Crypto is still new and especially defi but I think its like anything. I do think the way we have credit cards is how we need physical cards for defi aka hardware wallets that are secure. This is hard to achieve but of course its not like credit cards are that secure anyway other than being “insured” by your loaner. Id say that as time goes on tho hopefully there will be a higher development in personal finance that will allow us to move in the direction of defi.
DeFi faces challenges with transparency, security, and high collateral requirements.
RociFi addresses these concerns through on-chain credit scores, enhancing trust and mitigating risks. By reducing collateral needs, RociFi promotes accessibility, making DeFi more inclusive and secure. It’s a step forward in improving the DeFi ecosystem for mass adoption.
It’s all a ponzi, hence in risk off environment everything goes to zero as the whateveralt/BTC pair chart clearly shows
That it is defi
Compliance, there’s not compliance framework
Perhaps there are not enough trading platforms available, not just for swapping. It’s also important to have a user-friendly interface, and most importantly, the ability to convert fiat currency to cryptos on dexes. I have seen projects like ZyberSwap and Dafi Protocol that have implemented one or more of these features anyway.
There are a lot of projects folling or using defi just to use. I think they are shadowing other projects of such type. I think I do like rehold io is great example tho.
I am a big fan of such projects. I think rehold io is great example of such projects. I love it.
No DeFi without USDC or another fragile stablecoin.
How will it be integrated when there are still lapses and we still face scam and hacks? I think I support regulations. We can use ZKP technologies like NexeraID to comply to regulations and still be anonymous. So we need a bit of regualtion.
its not necessarily just DeFi, its blockchain/crypto as a whole. The entire system is far too complex for your average person. Its really too difficult to use, completely unfriendly to users, and oh, if someone gets your private key, there’s zero repercussions. Its nice to have decentralization, but its the price you pay. Until this is fixed, the FIAT system rules because there are protections.
hard to understand, private key management, fee cost depending on chains, no regulatory service when hacked
Defi has no value other than speculation on crypto.
Lending – overcollateralized hence only useful to trade on margin for a coin you think will go up.
Liquidity providing – only worth it if you think a price will remain stable so you collect trading fees, otherwise the very permanent impermanent loss will rek you.
Simplicity and user-friendliness are of utmost importance, as they encourage greater adoption among web2 users. The next areas that require improvement are scalability, security, and interoperability. Solutions like Cartesi Rollups already address these concerns, and it is up to developers to leverage these solutions to construct superior DeFi applications.
It’s not easy enough to use yet and it won’t be until it’s so easy to use that Gramgram and Pawpaw can setup and use DeFi by themeselves.
It’s rug season, everyone wants to be the guy that puts $50 in and exits with $5M, bad actors take advantage of that.
Ease of access, a much better U.I and a good security protocol, this is what i think most DeFi projects needs, though a few that I’m using now like Stack, and Sylo has already included into their protocols, and that has increased the traction on their Web 3 network.
The fees, it costs you $100 to buy $75 worth of ETH if you’re using a debit card.