How DEFI Wins

Picture this: You’re looking to secure a business loan to expand your company’s operations. You visit your bank’s website, fill out the application with all the details — loan amount, term, intended use of funds — and hit submit. Now you’re flooded with a deluge of rates and terms. Information overload and at the same time a lack of information; about all the other potential lenders.

But what’s the core of it? “I need financing to grow my business on agreeable terms, preferably the best terms.”

Today you have 2 main options: you can either spend your time and resources researching the best options available on the market, or you use the services of a traditional loan officer, your personal finance matchmaker, who sorts through the noise to find you that perfect or best offer for your specific situation. Sure, they take a cut, but think of the stress they lift off your shoulders not to mention the time you save.

Our reality

It will be difficult to argue that anything different from the scenarios mentioned above is “our reality” since I assume that whoever reads the Mindscope Academy blogs on crypto is not a crypto native. We write for people wanting to learn about the subject, not for people that are knowledgeable and actually using DEFI crypto services.

That said, our reality is that DEFI is broken in its current state. Maybe broken is not the right word, perhaps, unusable is more appropriate. On the off chance that you actually use DEFI services and are tempted to say that it works for you, I would argue that the UX is atrocious AND expensive. And I’m not saying you can’t make a profit with DEFI (which kinda negates the “expensive” argument) but you do that at the expensive of using some very clunky tools that ARE expensive and at times frustrating to use, not to mention the fact that it can be REALLY difficult to perform some actions due to the very different tools AND blockchains/technologies involved.

It’s about to change

Now, imagine a DeFi platform where “Solvers” are your financial matchmakers. They’re the intelligent bots that devise the optimal ways to satisfy your lending needs. And here’s the kicker — they’re not only saving you time, they’re also saving you money.

We’re presenting you: “Intents”. Imagine your request to be as simple as “I need a $500,000 loan to expand my factory, and I can afford an interest rate of no more than X%.” Or, a more crypto-probable scenario, “I want to snag some ether, and I’m not paying more than this much.” That request cues an army of Solvers to spring into action, scouring the digital landscape to source you the best terms. They’re like hounds sniffing out deals, tapping into a mix of on-chain and off-chain sources to make your financing dreams a reality. Yes, you read that right, on-chain and off-chain!

The DEFI darlings

Now, this example may have made you think about Automated Market Makers (AMMs) and how they’re not that difficult to use. But there’s much to be said about AMMs and its flaws. They’re still the big fish in the DeFi sea, sure, especially on Ethereum. They guarantee that there’s always someone to take the other side of your trade. But can we ignore the flaws? We’re talking toxic flows and that pesky impermanent loss — they’re the party poopers for the everyday user.

Yes, we have Virtual AMMs (vAMMs), like the ones on GMX, that let liquidity providers throw down against traders with more predictable outcomes. But they’ve got their own Achilles’ heel — a heavy reliance on price feeds from the oracle’s crystal ball.

CLOBs, on the other hand, are the darlings of centralized trading. They promise market clarity and the pinnacle of price discovery. But try to plant a CLOB on blockchain soil, and you’ll hit a snag. Gas fees and block times are like quicksand for CLOBs on Ethereum. And even on L2 or zippy chains like Solana, they’re still in the slow lane compared to the centralized speed demons.

Some projects are trying to sidestep these hurdles by crafting their own blockchain playgrounds. But there’s a trade-off — a nudge towards centralization, which might leave the decentralization purists with a sour taste. Wouldn’t it be peachy if we could have our decentralized cake and eat it too, without the heavy-duty hardware hang-ups?

Intents and RFQs

That’s where “Intents” and RFQ (Request for Quote) make their entrance. They let users lay out their crypto desires, and then it’s showtime for the Solvers. These “intents” can be as straightforward as swapping ETH for USDC or as complex as taking a leveraged position on a unicorn token using another crypto (in a different blockchain) as collateral. The sky’s the limit.

RFQ is a special type of intent where you ask for terms and the Solvers compete to offer you the best deal. It’s like a bidding war for your business.

An intent-based system opens the doors to all on-chain liquidity. Whether it’s a centralized lender, decentralized protocol, or some private credit desk, Solvers can tap into everything. They become the ultimate deal-sourcers, blending and optimizing to get you the ideal terms.

In the wild

Take Maple Finance’s approach, for example. You want a business loan. You submit your request to Maple, kickstarting an RFQ. Lenders can now pull from various sources, not just Maple’s own pools. It’s a free-for-all to fund your loan, meaning you could land better terms than expected.

But the real innovation happens when credit discovery moves on-chain. Currently, big banks rule rate-setting. But with intent-based DeFi, lenders can flex their muscles across all liquidity sources, unlocking profit opportunities beyond centralized finance.

But what about my granny?

What about the DeFi’s user experience? The journey’s been turbulent at best. But “Intents” could be the smooth road we’ve hoped for. They transform DeFi’s maze into a straight line for users. It’s like having a finance guru in your corner, working their magic to secure you the optimal deals effortlessly. You no longer need to learn about 3 different blockchains, bridges and all the different tools required to do what you envision doing.

As we push ahead, a wave of teams are rallying around this intent-powered future. From lending to structured products and beyond, the buzz around intents is electric.

Degens

Sure, DeFi devotees (degens?) may enjoy the thrill of the hunt and can’t see themselves living without bridging a few times a week, but for the mainstream, tech that simplifies all of that, is not just a nice to have — it’s a prerequisite.

Conclusion

So are intents the panacea for DeFi’s fragmentation? The jury’s still out. It has to be battle tested not just by crypto natives but by the mainstream users as well. But one thing’s clear: their potential is enticing. They’re not just streamlining DeFi; they’re rolling out the red carpet for the sideliners.

Take note, DeFi’s future isn’t just for crypto savants. It’s about making it effortless for anyone to participate so we can truly make finance accessible to anyone. Intents may be the secret sauce we need. I’m keeping my fingers crossed.