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Monolith Reflects: how DeFi needs to adapt for mass adoption

DeFi has been a flawed success. At the time of writing, the Total Value Locked in DeFi protocols is almost $89 billion, up from roughly $600 million at the start of 2020. The lightning speed of development in the space has been inspiring to be part of, but DeFi in its current iteration isn’t without problems. While huge amounts of capital has flooded into the ecosystem, hundreds of millions of dollars have been lost through hacks, bugs and exploits. Ethereum’s gas fees can also be prohibitively expensive when the network is congested. DeFi is still in its infancy, and it will need to evolve in a number of ways before it’s ready for mass adoption. Here, we highlight the three most important changes DeFi needs to make to attract the wider world.

DeFi needs to be easy

Crypto has historically been perceived as difficult to understand. The lack of exchanges and accessible wallet options presented a major barrier to Bitcoin adoption during the asset’s first decade. The industry has made huge progress since then, but finding wider use outside of a niche group of enthusiasts remains one of crypto’s biggest challenges.

The difficulty barrier has risen with DeFi. Even understanding the basics demands more knowledge than simply holding assets like Bitcoin or Ethereum. Staking, lending, borrowing, yield farming, and earning interest in DeFi aren’t easy without at least some guidance. Though few crypto users would like to admit it, all of the activities and jargon to learn can be overwhelming compared to using a regular bank account. As the space matures, it’s becoming increasingly difficult for outsiders to grasp what’s happening.

DeFi has become a game for a small group of insiders, and not only because of the technical knowledge required to master it. The expense of using Ethereum mainnet today has also isolated many, which is something we’ve seen first hand with our own offering.

For DeFi to fulfil its world-changing potential, it will need to provide a simple user experience that anyone can understand. Until DeFi becomes an effortless experience for users, it will not succeed in appealing to the masses.

DeFi needs to be safe

One of the biggest criticisms of cryptocurrencies is their price volatility. Since Bitcoin’s launch, detractors have pointed to wild price fluctuations as a reason for why crypto will never replace currencies like the dollar or sterling. Events such as Black Thursday, when the price of Bitcoin and Ethereum plummeted more than 40%, have highlighted the volatile nature of the crypto market. Such incidents are a major turnoff to most who aren’t familiar with the space, and serve as a reminder of the risk associated with investing in an emergent asset class.

DeFi compounds the risk of investing in crypto due to the number of bugs, attacks and exploits that occur on a regular basis. $100 million was lost in hacks in 2020, and several major incidents have hit the space since then. Flash loan attacks, rug pulls, smart contract bugs, liquidations, lost stablecoin pegs — there are countless risks to using DeFi, all of them leading to potentially devastating losses. While DeFi is still in its experimental stages, these risks will continue to wreak havoc across the space.

We know that safety is the number one priority for most people when finances are concerned, and it’s something we’ve always taken seriously. But we recognise that we could do more to put less experienced users at ease. By providing users with easy access to stablecoins like DAI, we hope to help new users benefit from the magic of DeFi without being exposed to the heavy drops assets like BTC are prone to. Stablecoins also provide a way to leverage DeFi’s generous yields; many of the most attractive APY rates are paid on stable assets. We want to help our community watch their money grow, and making it easy to access interest-bearing stablecoins is one way of achieving that.

DeFi needs to be fun

For many people, the subject of money evokes feelings of fear. It’s part of what’s helped banks proposer; with promises of safeguarding savings, they have won the trust of those who see looking after money as a burden. That’s worked to an extent, but the promise of DeFi has shown that the world could benefit from an alternative system. However, self-sovereign money won’t catch on around the world as long as the subject has a negative stigma attached to it. We think that money should be fun. And that includes DeFi.

If DeFi had a more accessible user experience, more people around the world could benefit from it. Currently, DeFi is a complex world that only a small minority are up to speed with. As DeFi evolves, the knowledge gap is only increasing. DeFi needs to be easy and fun. Many of the world’s most successful apps have hit millions of users by creating products that people felt compelled to play around with. That’s obvious from the likes of TikTok, SnapChat, and Instagram, but it also extends to money-based offerings like Robinhood and Monzo.

There’s currently no DeFi wallet on the market that will appeal to 1 billion people. While we’ve always aimed to be an easy portal in and out of DeFi, we didn’t realise the importance of making money fun. Using DeFi should be as fun and easy as playing a video game.

Final thoughts

DeFi will change the world this decade; it already has. But there’s a lot to change before it will be ready for mass adoption. Apart from technical issues like scaling, some of the biggest challenges center on the perceived difficulty and safety of DeFi. Before it was known as “DeFi”, we used to call this technology “open finance”. But the space isn’t open enough to regular people as it stands today. It needs to be easy, safe and fun first. That’s what we’re putting our efforts on now. And we’ll reveal more very soon.

Download the Monolith app here.



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Monolith is the world’s first DeFi wallet and accompanying Visa debit card made for spending crypto assets anywhere.