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  • Writer's pictureDoron Alter

Opportunities in DeFi

The disruption that began at the intersection of computer science and economics, will continue to cross and impact other boundaries. As a new generation of companies and leaders in the software and financial industries is born, these are exciting times to be investors and builders.

If you're building in the space, we'd love to hear from you!

If you're still exploring different ideas, here are some of our thoughts and areas of interest:

We believe that in the next few years, DeFi is not likely to completely replace Traditional Finance for consumers direct use. It is very likely however to replace and expand on the underlying infrastructure institutions use.

Infrastructure for institutional use

The current infrastructure was built in the 70s and 80s. New DeFi infrastructure will become standard and replace it. It will be used by banks, fintech companies and institutions. The following areas for innovation will help drive adoption and remove friction:

  • Protocols that expand beyond traditional services like lending, trading and wires. Lending is currently the most mature application. Builders should have institutional customers in mind

  • Stablecoins are the basis for many different activities in crypto. Few will become winners

  • Data related services: Analyze protocols and blockchains to identify and alert regarding different risks

  • Insurance / Protection against hacks: Cyber companies with a focus on smart contracts, blockchains, bugs, hacks, fraud

  • Permissioned DeFi: A system where the parties have gone through AML, KYC and got whitelisted (perhaps given an NFT by some authority)

Removing friction from consumer adoption

To get widespread, DeFi Applications would have to become much simpler to use.

Being your own bank is a huge responsibility. As long as people need to deal with Seed Phrases and private keys, we will not see a mass consumer adoption of self-custodian wallets.

More consumer adoption will most likely be possible through custodians and services like Coinbase and Robinhood. But the UX must be much more simple to use than it is today.


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