Crypto's town square agrees that DeFi has too much infrastructure and not enough applications. Venture capitalists and private equity investors have invested hundreds of millions in crypto infrastructure projects this year.
Highlight reel speaks for itself. In the first quarter, VC firm a16z committed $100 million to Eigen Layer, a restaking protocol and infrastructure layer for Ethereum; Bridgewater Capital and Deus X Capital funded a $250 million infrastructure platform; and RW3 Ventures raised $60 million for a blockchain infrastructure and DeFi fund. A fast search of any crypto news site yields innumerable identical headlines.
During and during the Ethereum Community Conferences, or EthCC'24, in mid-July, many agreed that we need more apps and less infrastructure.
A valid viewpoint on the surface. Investing too much in infrastructure is like creating the finest theme park without the rides. Does the park's lovely walkways, smart gift stores, and well-equipped food vendors matter? No one will come or pay to play without a roller coaster or five.
Theory and potential can only motivate so many customers. A large number of applications might attract and maintain DeFi customers. Users will have more reasons to join and explore with additional possibilities.
The issue? Adding applications will only aid the DeFi ecosystem's long-term development and viability so much. Returning to our example, a successful theme park requires a variety of rides to attract visitors, but if they're hard to get to or unpleasant, interest will drop.
User experience is the key issue in the apps vs. infra discussion.
The DeFi ecosystem (and the nascent BTCFi industry) is almost comically confusing for laypeople. Even basic tasks like transferring assets across dapps in various ecosystems may take time and frustrate consumers. Bridging and exchanging, essential to cross-chain transactions, are almost hard for crypto beginners to understand without expert help. Laypeople are hard to blame for quitting up halfway or not trying.
Infrastructure is designed to help dApps onboard users, yet the BTCfi ecosystem is currently fragmented amongst Bitcoin entities.
variants. Interoperability has improved in crypto, but user experience is still complicated. Scalability, slippage, MEV issues, TVL honeypots, and sluggish, costly transactions plague traditional bridges and platforms.
The “we need apps, not infra” argument misunderstands dApp and infra development by prioritizing one over the other. Quality and effect matter more than quantity in infrastructure initiatives.
Fair enough, few plan low-impact infrastructure projects. Many first-generation dApps need their creators to develop infrastructural rails from scratch, typifying DeFi's pioneering ethos.
As in any race, not everyone can win, and many infra initiatives today may never be influential. Time is running out to create projects for DeFi fanatics ready to learn dapps. DeFi is going mainstream, and amateur consumers won't accept lousy UX or care about infrastructure. As a typical experience, booking an Uber trip doesn't matter if the platform runs on AWS or Google Cloud; you simply want to go from A to B.
Our objective should be to create solid infrastructure and isolate it from users so they can use their dApps without worrying about how it works. Users should find it straightforward to use the DeFi ecosystem and its apps. We must provide rapid, zero-slippage, MEV-resistant, secure swaps with outstanding UX to facilitate interoperability. Next, emphasize infra-abstraction; consumers should never see the metaphorical cogs.
Intent-based design allows user-centric DeFi development. Intent-based blockchain design prioritizes users above complicated processes. This allows consumers to specify their goal (e.g., buy a BTCFi program using Ethereum coins) and trust the blockchain protocol to automatically perform the technical processes. If widely used, intent-based models might ensure infra-abstraction, improve user experiences, and simplify design.
Of course, intent-based architecture isn't perfect. Projects and protocols must work together to provide smooth interactions that abstract operational intricacies that users may find daunting. Innovators must design for amateurs, not crypto experts.
It's time to stop debating infrastructure vs. applications and concentrate on people. The financial split between app and infrastructure initiatives and architectural design probably don't matter to most users as long as they maintain high-security requirements and get the job done. Consumers must be able to utilize applications, conduct transactions, and discover new methods to use and create money using DeFi to make blockchain-based finance accessible and understandable. As innovators and champions for DeFi's potential, we must (re)create the ecosystem so novice users may explore without feeling confused, overwhelmed, or disheartened.
