Charlie its always sunny

The DeFi Disconnect

By R23 | Supportive Crypto Community | 11 Mar 2022

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This is what I look like explaining DeFi, yield optimizers and liquidity farming to my non-crypto friends and family.

The Problem

After working with it for a little over a year, Decentralized Finance is something that makes intuitive sense to me. You find a platform you believe in and then you invest money to be used in swaps on that site and you benefit by receiving the fees. It feels logical to me, yet when someone asks me to explain it to them, I end up finding the most difficult answers possible.

Common questions that I hear include:

  • Where does the money come from?
  • Why does the crypto you earn have value?
  • Who is in charge of distributing the money?
  • How are the rates determined?
  • How can we trust such astronomical APR rates?
  • What the hell is yield?
  • What is a yield optimizer?
  • What is liquidity farming?
  • What if the internet breaks?
  • Who would I contact if I make a mistake?

As you can see, these questions all have answers, but to the completely uninitiated, it is a very difficult concept to grasp if you reply that "well the money comes from people making swaps"... Well where is that coming from? Is there a warehouse somewhere with a bunch of money labeled "for the DeFi liquidity". It is a bit out there in terms of bringing in new users.

I feel like when I am providing answers to questions, even when doing it as simply as possible I find myself losing the person I am speaking to. This brand of finance is so new and people are just not used to using anything but banks and brokers that it takes a while to grasp what is going on.

The Solution

I think that the easiest way to learn how DeFi works is to go and just do it, but I also understand that people aren't always willing to spend money in order to learn how their money is being used.

For that reason, I think the most optimal idea is to have a demo version of a DeFi platform that is released and uses demo funds that mirror the real value of the crypto on the live site. A lot of exchanges allow users to trade with demo funds and I think that it could prove wildly beneficial for the DeFi world if more people were allowed to experiment and explore without the risk of losing their investment.

Explainer courses would help as well, but as I mentioned, even providing explanations in this field is something quite difficult as the explanations offer require a bit of prior knowledge on crypto or on financial markets. You could argue that point, but with so many buzzwords to know in order to succeed in the DeFi space, I think that a knowledge base is a barrier to entry for most.

I like what @khaleelkazi has done from a marketing standpoint with his "number go up always" movement, I think that will be a good buzzword, yet understanding why that number is going up is not so intuitive for someone who has never done something like this before.

Being early to a movement comes with the responsibility to be able to teach others yet to come. That is what I think is missing from the DeFi movement; a movement that is the future of finance and financial independence.

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Who I am:
My name is Rob and I am a prospective law student with interests in cryptocurrency and blockchain. I have enjoyed my time thus far engaging with Web 3.0 and am looking to continue learning more and sharing what I learn through my experience

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A new cryptocurrency investor looking to learn as much as possible about smart contracts and coding!

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