Decentralized finance (Defi), touted as a panacea, faces obstacles that greatly reduce its chances of becoming mainstream, argues serial entrepreneur and Radix DLT CEO,Piers Ridyard Ridyard said that while defi is seen as a “great proof of concept,” widespread adoption of this alternative to traditional finance is only possible if the developer and user experience is improved He added that.
Massive Adoption of Developer Incentives and Defi
In addition to improving the developer and user experience, Radix’s CEO told Bitcoin. com News that by providing ongoing and sustained support to developers, “ghosting chain” so that they “never end up in the chain,” he said. Ridyard, a YC Alumni, also shared his thoughts on how defi and Web3 can overcome their scaling woes.
Ridyard also discussed Coinbase’s recently launched attempt to empower developers with layer 2 (L2) blockchain and why this is unlikely to lead to the anticipated mass adoption of defi. Below are the CEO’s responses to questions sent to Bitcoin. com News via Whatsapp.
Bitcoin.com News (BCN): What do you think is the biggest obstacle facing Defi today?
Piers Liddiard (PR): There are two major obstacles. First, the Defi user experience is completely unacceptable to the general public. Second, the developer experience is so difficult that very few developers have actually reached a level where they can create secure smart contracts.
That said, today’s Defi is a great proof of concept, and as seen in the Defi summer, there is no shortage of innovative ideas that offer real benefits to users and capital. But it is still only a proof of concept. Week after week, headlines of Dapps’ multi-million dollar exploits hit the news.
A quick search on Twitter will show you examples of experienced users whose wallets have been depleted because they had to sign blind. And if you’ve ever tried to get a friend or family member on crypto/defi, it goes without saying that things like seed phrases are far from what most people use to secure their net worth.
As with any good proof of concept, we can clearly see how it works, but it is far from mass adoption; the biggest obstacle for Defi is to build on this proof of concept to create an experience that will give developers, entrepreneurs, and their users confidence when engaging with the Defi ecosystem The biggest obstacle for Defi is to create an experience that gives developers, entrepreneurs, and their users confidence in engaging with the Defi ecosystem. This requires both an intuitive, secure, and scalable developer and user experience.
BCN: Developer incentives are said to be critical to driving growth in the defi ecosystem. How do you incentivize developers to encourage growth?
PR:Developers are inclined to what Coinbase calls centralized defi, or “cedefi”. However, I would argue that it is not an easy place to build Dapps. Nor will it be low-cost in the long run. Why.
First, Dapps built on Base will run on the Ethereum Virtual Machine (EVM), and while EVM is arguably the most popular environment for developers to build Dapps today, over the past two years billions of dollars worth has been hacked and proven insecure time and again ($200 million byEuler Financein the last week alone).
To make it easy for developers, we need to look beyond EVM to a new environment that provides tools for developers to create and manage assets (tokens), with the platform itself handling security, verification, and accounting. Many of these vulnerabilities that lead to hacking and exploitation become impossible when the platform handles the assets rather than the developer’s smart contracts.
Second, Base, which is layer 2, is after all just a new blockchain. This means that Dapps on Ethereum cannot be used directly on Base, and thus cannot improve the scalability of Ethereum. Also, none of the Dapps on Base can be used directly on Ethereum. This is because they lose “atomic composability” (more on this later) between Ethereum and Base. As a result, Base will have its own instances of each Dapp, including a new DEX with its own liquidity pool and brand new lending Dapps. Eventually, if Base becomes popular enough, it will reach the limits of its own scalability and transaction fees will creep back in.
In terms of its impact on Defi’s popularity, Base is definitely a good thing; with Coinbase’s brand and resources, more users will be able to “tiptoe” to Defi and see what it’s like. However, due to the limited number of validators allowed, Base is not truly decentralized; Base is primarily useful as a stepping stone to attract more users into the space; unless Defi is truly decentralized, mass adoption will not be possible. The clue is in its name.
BCN: On the subject of layer 2 chains, let’s talk about another important growth issue for Defi and Web3: scalability. From Layer 2 to sharding, most of today’s networks are in a race to scale up. These solutions will eventually machineIn the 1990s, game developers had to build their own engines from scratch, defining gravity, physics, and graphic rendering methods for each game they created. Then in the late 1990s, game engines like the Unreal Engine were born. Now you can create a game simply by requesting parameters from the engine, such as setting gravity to 1. You can make any game you want, but developers now have the tools to do the standard things they need to do every day, safely, intuitively and quickly.
That’s what the asset-oriented paradigm means for Web3 and DeFi.
BCN: Can you explain very clearly what atomic composability means?
PR: This is a perfect segue. When a transaction is “atomic” it means that either all legs of that transaction happen or nothing happens. In other words, it is “All or Nothing.” It is the same as the house example I mentioned earlier. By “composability” I mean the ability to put things together. For example, Lego bricks are designed to snap together, so they can be composed of each other.
So atomic composability means that you can combine things (e.g., the two legs of a house deal) and guarantee that it will all get done or not.
BCN: People in the crypto and blockchain fields often talk about the blockchain trilemma or quadrilemma, and Radix says that Cerberus, the consensus layer, will solve this. Tell us how it works and how it manages infinite scalability without breaking so-called atomic composability.
PR:How much time do we have? This is a fairly deep topic, but let’s revisit the mental model we discussed earlier. In a blockchain, transactions take place in blocks. Once a block is finalized, that’s it. In other words, a block prevents “atomization” across two or more blocks.
Instead, Cerberus eliminates the block altogether. Instead of chaining blocks, Cerberus chains transactions, and transactions and transactions. This means that if you need to interact with a part of the Radix ledger, say leg 1 of a house transaction needs to interact with leg 2 of a house transaction, you can atomically combine both transactions whenever you need to, regardless of where that data is stored. The transaction is freed from the constraints of the block.
The result is that transaction processing can be massively parallel across trillions of shards (2^256 to be exact). But whenever needed, something can be snapped up with atomic composability: a DEX on Radix will always be in the same place as every other Dapp on the Radix ledger, no matter where it is stored or how many transactions are being processed. Atomic Composability.
This particular insight required 7 years of research (2013-2020). It is truly linearly scalable without compromising atomic composability.
