DeFi can provide core financial services. These principles and guidelines will help us add value.
Ethics. We should be a reliable partner for all of our stakeholders, and for the economy as a whole
Transparency. We should be pushing DeFi levels of transparency into CeFi deals. Transparency is the DeFi superpower. Borrowers and investors will qualify for DeFi funding by making an extra effort to provide reporting and transparency.
Economic value. We should be adding value to the real economy. Services for trading and leveraging crypto often do not provide any off-chain value. Society will measure us according to our success in helping builders to deliver food, fuel, shelter, infrastructure, and innovation.
- Business models that rely on token rewards
- Deals that aren't competitive in the professional TradFi market
Compose: DeFi building blocks are available to everyone. This improves innovation and product delivery. The ecosystems as a whole can build services more effectively than hundreds of enterprise teams building incompatible systems.
Reduce risk. Reduce financial risks with transparency. At the macro level, real-time transparency allows us to see systemic risks and respond before they become problematic. At the micro level, it reduces the need for the slower mechanisms of regulation and audit.
Scale. Deliver services where they are needed. Experts can join the decentralized network to supply money and services to new markets. Automation reduces incremental investment in people, systems, buildings, reporting.
We need to work around some DeFi weaknesses:
Security and loss rate. DeFi transactions are not reversible, and have a high rate of loss due to hacks and mistakes. The benefits need to outweigh these losses.
Regulation. DeFi is inherently global, and it does not fit well into national regulations. This conflict will not be resolved by making products that are compliant, but bad. We attempt to resolve the conflict by making good products that add value for wholesale professionals, and then fitting them into national markets.
Governance. We believe in the power of user cooperatives. One hundred years ago, this idea launched many successful "mutual" savings banks and insurance companies. DeFi DAOs are a worthy successor. However, decentralized governance is not fast and focused. We simplify the pieces of the system that are governed by a DAO. The DAO administers software. It pushes operational complexity to experts such as wholesale borrowers.