What's the best DeFi project? One where the value proposition is actually clear, there are actually people using it and it's actually at parity or better than a traditional financial system offering?
Runner ups are Compound and Aave — two large overcollateralized lending platforms. And the Maker: the USD-pegged “stablecoin” which gives anyone who doesn’t want ETH price exposure access to these DeFi tools. That’s the area where a lot of people think there’s room for improvement, hence all the experiments like the project this article is about.
Most of the stuff people use essentially seems to be one form or another of shuffling the unit(s) of account around, like the ones you listed.
You have a cryptocurrency. What are the uses for the cryptocurrency? Well, you can swap the cryptocurrency for another cryptocurrency or let someone else borrow the cryptocurrency in exchange for some more of the cryptocurrency or use the cryptocurrency to obtain a cryptocurrency that's a derivative of another cryptocurrency so you can make more of a different cryptocurrency. And what can you do with that cryptocurrency? Well, you can swap that cryptocurrency for another cryptocurrency or...
There's a bit of a "pull yourself up by your bootstraps" thing going on (in the initial sense of the term).
Despite the cynical question, I'm genuinely fairly optimistic about the future of smart contracts and Ethereum. I think there are some interesting non-ouroboros ideas in the space, like Kleros, but none of the ones I've seen seem too popular, valuable, or useful yet. But I could be missing some, and I know it's still the very early days.
I think some people got sold on this false premise that cryptocurrency would reinvent the entire world, build a new decentralized internet, etc. etc. And then they miss what's actually happening, because it's just "boring finance stuff". This is actually really important stuff that's being built.
At the heart of it though, finance allows efficient allocation of capital, which allows innovators to have the resources they need to perform R&D and bring new products/services to the market. If you consider money a proxy for energy, it makes sense that we need ways to store it, move it, and concentrate it, so it can fuel the engines of innovation.
A lot of capital from the finance industry seems to be used to innovate for, perform R&D on, and bring new products/services to the finance industry. Some of that ends up in the hands of VCs and other investors - but then a lot of them also put most or all it into the finance industry in one form or another, and then put their returns on that into the finance industry as well.
Some subset does go into other industries, and that's certainly good; if the money was acquired ethically, at least. But then a lot of or all of the returns on that probably also go into the finance industry. Some of them will continue to invest in actual things for the rest of their career, in which case it's probably all a net benefit for the particular industry being invested in, and potentially also for the economy and for society, but it kind of feels like squeezing a ten-million ton lemon to produce a pint of lemonade.
Money is a proxy for energy, and energy is a proxy for power. (And by the transitive property, money is a proxy for power, though everyone knows that one.) All three can theoretically be used for good, useful things that benefit humanity. On average, maybe they do or maybe they don't; not sure. But at the extremes, where there's a dense concentration of money, energy, and/or power distributed across a few small clusters, it seems like it typically isn't used that way. And I'm definitely no Marxist in the slightest; I like capitalism in theory and often in practice. It's more the meta-capitalism I don't like.
Things like ERC/BEP-20 tokens are kind of a proxy for the capitalism of capitalism distilled to its purest, rawest, most comical form. Some people with good intentions like Vitalik Buterin do use that to benefit humanity, and work on meta-capitalism with the intrinsic terminal goal of benefitting humanity, but I think most people don't and won't. You need meta-capitalism, just like you (generally) need a government and a military and a police force, but with great power comes great opportunity to ride that bull to the moon and beyond.
Perhaps my opinion will change at some point, but, to me, it evokes intense unctuousness. I think I might even prefer this contemporary Wild West to some extent. It's pure and it's actually honest about its intentions. It's Oceania. There's no bullshit. They tell you what they want and what they're doing in full earnestness with a smile on their face and a hand in your pocket. In various communities, people openly and cheerfully talk about how they know it's all a racket and a game. They know there're absolutely no "fundamentals".
Some seem, or at least claim, to do it because they feel like Wall Street has had a monopoly on it for ages and now they finally get a chance at it without any gatekeepers or corporate masks. Some don't care either way and do it because they want to and they like the dopamine rush from both the "journey" and the "destination(s)". (It's probably a mix of both motivations for most.) Can't say I like it, but I certainly respect it a lot more than the people who dress it up in bespoke clothing.
I really don't hate cryptocurrencies at all. I've been following them for over a decade. My post history here is filled to the brim with lengthy defenses of them, constantly arguing with the stereotypical black-and-white HN skeptic. I've been seriously considering even trying to pivot my entire career into the industry. But I still think it's unlikely I'll ever not dislike finance.
But even then, all the new cryptos are usually totally useless for peer to peer, private transactions since they merely piggy back off the ETH/Binance/etc chain. They often don't even support p2p transactions at all, and are now openly designed just to be hodled or dumped through exchanges
Monero is pretty old by now, but it's still the goldstandard when it comes to security/privacy/opsec, and darknet markets are slowly starting to phase out even BTC (which is a total opsec disaster considering how traceable it is) in favor of Monero.
Agree though, smart contracts are where the future lies in many of these projects. Tough to pick up but where I'd be if I were a SW dev.
I'm hoping that when rollups and sharding get tx/sec into five figures, there will be more room for other sorts of applications.
You can easily get 50%+ APY a year on various stablecoins and crypto.