After discussing public chains, let's take a look at DeFi projects. What is DeFi? DeFi stands for "Decentralized Finance," providing a series of financial services such as lending, trading, stablecoins, and insurance on-chain, allowing users to achieve capital flow without relying on banks or centralized institutions.
Now, let's examine the current issues in the DeFi space:
1. High user threshold: To use DeFi, the first step can be a hurdle for many. Wallet creation, mnemonic phrase storage, on-chain operations, signatures, gas fees... each step poses a challenge for newcomers. For instance, a single swap on the Ethereum chain might incur fees of several dozen dollars; how can small users participate?
2. Frequent security incidents: Some issues are beyond user control, such as hacker attacks. In 2024, losses amounted to $1.49 billion, and just four months into this year, the crypto industry has already lost $1.742 billion due to hacking. There are many reasons, such as smart contract vulnerabilities, private key leaks, the fragility of cross-chain bridges, and flash loan attacks. Once these problems arise, user funds can be wiped out.
3. Low capital efficiency: Many DeFi lending protocols require over-collateralization. For example, if you want to borrow 100 USDC, you might need to collateralize $150 worth of ETH. This model results in low capital utilization and limited growth potential.
4. Fragmented liquidity: The dispersion of liquidity across different protocols and chains leads to high slippage and low efficiency. Users need to exchange assets across multiple platforms and pay gas fees multiple times, resulting in a very poor experience.
Now, looking back at this DeFi project, what problems does it solve from the above?
If you claim to lower the user threshold, how did you achieve that? Is there better wallet integration or simpler interaction methods? If you say you are more secure, do you have multiple audits of your smart contracts or an asset insurance mechanism? If you claim high capital efficiency, can you support uncollateralized lending or yield aggregation? And how do you address liquidity? Have you aggregated asset pools across multiple chains and protocols?
Of course, we must return to these three points:
- Do you offer a better, safer, and more efficient experience than existing mainstream DeFi protocols?
- Do you have technological innovations? For example, new AMM algorithms, non-liquidation lending models, or off-chain credit systems?
- Do you have real users? Is there real trading volume? Or are you just relying on airdrop hype?
DeFi is not just about moving banks onto the blockchain; it fundamentally changes the rules of the game regarding "who can control capital." It is not merely about replicating Web2 finance on-chain, but about constructing a Web3-native method of capital circulation—transparent, autonomous, censorship-resistant, and accessible to everyone. Only by achieving these points can it truly be called DeFi.