This insightful panel about DeFi is moderated by Chandar Lal, Principal of Mosaic Ventures, who leads the discussion among Ali Al-Ali, Technical Lead at Gridex Protocol, Alex Strzesniewski, Founder & CEO of AngelBlock, Francesco Abbate, Chairman of 1inch pro, Ivo Grigorov, CEO of Credefi, and Mounir Benchemled, Founder of ParaSwap.
How Did the FTX Collapse Impact DeFi?
Francesco and Mounir both admit the collapse of FTX has led to an increasing shift from centralized exchanges (CEXs) to decentralized exchanges (DEXs) as users are more concerned about self-custody. Mounir points out that the technological advancements over the past few years, especially the Layer 2 solutions, make users more comfortable using DEXs.
Despite growth in volume and user base, Alex believes the DeFi ecosystem is still in its early stages, requiring enhancements in user experience and interface design. While the FTX collapse attracted new users, he questions if those unfamiliar with Web3 will choose DeFi as their initial entry. Alex anticipates the continued popularity of CEXs due to ease of use and familiarity with traditional finance.
Agreeing with Alex, Ali asserts that the user experience in DeFi needs a revolution to cater to non-crypto people. On the other hand, Ivo mentions that appropriate regulations and governance will be needed to make new users comfortable trusting the DeFi services.
Should DeFi Focus on Onboarding New Users or Benefitting Active Web3 Users?
Alex believes that it’s important to identify a specific target audience and keep optimizing services based on community feedback. “Building for everyone means building for no one.” He suggests companies be flexible and adjust to market feedback to avoid losing focus along the way.
Francesco recognizes the need for DeFi to strike a balance between listening to core users and not designing something too sophisticated for new users. Ivo thinks that in order to attract new users, DeFi needs to find a way to interact with the real-world economy and bring institutional adoption.
“I think while we need to do some level of adaptation to bring on those people, DeFi still needs to stay DeFi. I think eventually that will become the norm.”
– Ali Al-Ali, Technical Lead at Gridex Protocol
Will Regulations Drive DeFi Adoption in the Coming Years?
Ivo emphasizes the inevitability of regulation, as he believes DeFi cannot exist in a separate universe from society. Meanwhile, education and a clear explanation of DeFi’s purpose to regulators will be crucial to proceed with this in a structured way.
Working in the United States, Alex reminds us that regulations in different regions are not a one-size-fits-all approach, and it’s important to understand the nuances. He thinks litigation is not the appropriate way to regulate DeFi. EU’s MiCA regulation seems to him a better step for DeFi regulation.
Ali points out that the purpose of regulation is supposed to protect users, but regulations won’t be able to protect users if regulators don’t understand what DeFi is and how it works. For example, to him, Know Your Customers (KYC) on the DeFi front end may not be effective in deterring malicious actors, as they are likely technically skilled and may bypass the KYC by interacting directly with the smart contracts. From a technical perspective, Ali thinks Zero-Knowledge(ZK)-proof solutions can be a better solution to protect users.
Based on the crypto mantra, “If you don’t like it, fork it,” Alex thinks overregulation should be avoided as there will always be competitors that offer a similar or better UI/UX service without the same regulatory compliance. At the end of the day, it’s always up to the market to decide. And if protocols choose to take a route that their user base doesn’t agree with, they’re always going to find an alternative. Always.
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What’s Your Advice for Builders in the Crypto Space?
Francesco advises builders to stake cash and consider whether they can survive for two years without revenue. They should focus on building something that addresses a real issue and spend money accordingly.
Alex suggests builders focus on creating a strong community and listening to their feedback. Don’t jump to implement Artificial intelligence (AI) simply because everyone is talking about it, and spend the budget on fixing real issues. During bear markets, use the opportunity to reassess and build something that users truly need.
