Solving DeFi’s Complexity Problem As Adoption Stalls

Decentralized Finance (DeFi) has the potential to revolutionize the financial landscape by offering decentralized, transparent, and accessible financial services. Despite its promise, DeFi adoption has been slower than anticipated, primarily due to the complexity of its systems. To unlock DeFi's full potential and drive widespread adoption, it's crucial to address the usability and accessibility challenges that hinder its growth.

DeFi aims to create an open financial system by leveraging blockchain technology to eliminate intermediaries, reduce costs, and increase transparency. It offers a range of services, including lending, borrowing, trading, and yield farming, all managed through smart contracts on decentralized platforms.

Despite this, however, there are several factors that contribute to the overall complexity of DeFi. From the abundance of technical jargon to unfriendly user interfaces and even security concerns, DeFi protocols have been plagued by several issues over time. And although there have been improvements, experts still think that the market needs a lot of work.

Recently, we spoke with Mitchell Nishimura, the founder of the Elys Network, to understand his vision for the project and their approach to transforming the DeFi space.

1. Of the many issues plaguing DeFi, which do you believe is most pressing?

The DeFi landscape today holds immense potential for growth and improvement. To truly invite new users into the DeFi ecosystem, the foremost area requiring enhancement is the user experience.

Currently, participating in DeFi can be a daunting task for those without prior knowledge, and for some, it may even seem impossible. The solution begins with the User Interface. A user-friendly UI that caters to both novices and seasoned users is crucial. This is the secret behind the success of platforms like Binance and Coinbase, which attract millions of daily users through their accessible and intuitive designs.

There is a need for a platform that prioritizes seamless onboarding and effortless interaction. CEX will always be easier to use for newcomers and It's important for that reason DeFi UI to mirror that of a CEX, to make DeFi participation as straightforward as possible.

Another critical issue specific to the DeFi industry is the fragmentation of liquidity. Multiple chains often present navigational challenges and incur significant bridge/swap fees. There is a need to unify the liquidity across various ecosystems such as Solana, Bitcoin, Avalanche, and EVM chains. These two aspects—enhancing user experience and unifying liquidity—are pivotal to the future of DeFi. Chain and wallet abstraction, combined with a diverse range of DeFi products, will play a significant role in achieving these goals.

2. What is the Elys Network solution and how do you plan to transform the market?

Elys Network offers a solution designed to streamline and simplify digital asset trading across various blockchain ecosystems. At its core is the Universal Liquidity Layer, which integrates tokens from multiple networks to enhance the efficiency and accessibility of trading. This decentralized liquidity framework aims to provide users with quick and secure access to a wide range of cryptocurrencies without the need to navigate the complexities of different blockchains.

Our goal is to make decentralized finance (DeFi) more accessible to a broader audience by offering a user-friendly platform that caters to both experienced traders and newcomers. Whether on a computer or mobile device, users can manage their assets across various ecosystems with minimal effort.

3. What informed your choice of a blockchain to implement?

We considered various factors when choosing which blockchain to implement. We could have decided to build our application on any blockchain, but each option comes with its own limitations in terms of our ability to evolve, particularly related to the programming language used.

For instance, if we had chosen an EVM environment, we would have been restricted to using Solidity, which is quite limiting. Additionally, EVM blockchains wouldn't have been able to meet our requirement for fast execution speed.

Ultimately, we opted to build our own blockchain using the Cosmos SDK, as it offered a better fit for our needs. The code language, Cosmwasam, is based on Rust, which is much more flexible and adaptable. This allows us to design our blockchain to efficiently support a high-demand trading environment.

4. Besides the issues raised, how do you believe DeFi can work around the regulation challenges?

As DeFi continues to grow and garner support from both retail and institutional users, regulatory considerations will continue to impact development. Rather than working around these regulatory challenges, we believe that DeFi can be built with transparency and full regulatory compliance while still maintaining self-custody, efficiency, safety, and security. Establishing credibility and working closely with regulators is key to making this happen. Having a seat at the table to ensure regulatory compliance is not only helpful from the education aspect, but also in shaping future regulations to usher in the expansion of DeFi.

5. Do you believe the DeFi market can come out of traditional crypto’s shadow and become a standalone, viable market on its own?

The blockchain industry continues to evolve with new products and services, providing promising alternatives to existing traditional "Web2'' or brick and mortar offerings. Eventually, we will see more elements from existing economies migrate or offer competitive products in the "Web3" space, resulting to the "sectorization" of the blockchain industry.DeFi firmly established its position as a major sector, and several others will follow suit to include software, real estate, communication services, health care, and more. For these sectors to become successful, DeFi will serve as the growth engine that not only seeds these growing categories, but also serves to sustain and regenerate the full blockchain economy through decentralized lending, savings, payments, and more. In other words, DeFi will naturally be embedded in all other blockchain sectors to allow the entire industry to thrive as a fully functioning economy.