DeFi Was Never The Endgame

DeFi Was Never The Endgame

Moving from Infra to consumer-oriented applications in crypto

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What started as a groundbreaking idea has become a dynamic, evolving ecosystem. Crypto is going through a pivotal moment of change, extending far beyond the boundaries of decentralized finance (DeFi) into user-centric innovation. Think of it like the Marvel Cinematic Universe: each chapter brings new challenges and adventures. While some people are still stuck in the past, focused on building the intricate foundations of DeFi protocols, where trust and transparency are harmonized with blockchain technology, others are turning to a new phase: applications that prioritize the user experience, reshaping how we interact, transact, and engage in the digital realm. My goal is to shine a light on this evolution, the gradual shift from protocol-focused developments to the recent development of various breakout user-centric applications and what it means for the general crypto ecosystem.

Credit: Canonical Crypto

The DeFi Phase: Building the Foundation

Satoshi's invention of Bitcoin and Vitalik's creation of a smart contract-enabled blockchain called Ethereum were indeed monumental feats in the history of the crypto evolution. However, the introduction of DeFi (Decentralized Finance) changed the game. DeFi projects emerged as a force to be reckoned with, fundamentally changing how we interact with financial services in a decentralized manner.

Platforms like Compound introduced algorithmic interest rates, while Aave pioneered flash loans—a concept that transformed lending dynamics. Uniswap's automated market-making (AMM) mechanism redefined token swaps, and Yearn.Finance aggregated yield farming strategies, increasing efficiency. MakerDAO's decentralized stablecoins provided stability in a volatile market. These projects collectively formed the building blocks of crypto utility, demonstrating the potential of blockchain technology to reshape traditional financial systems. DeFi fostered a community united by the idea of financial autonomy and a decentralized future.

Step by step: Assembling the Legos

Interoperability and Cross-Chain Solutions

With the advent of DeFi came a series of other transformative milestones that deserve a closer look. One is the innovation of blockchain bridges—pathways that bridge the gap between disparate blockchains, enabling seamless interoperability. These bridges, such as the Connext Bridge, Synapse Bridge, Multichain Bridge, etc. have dissolved barriers that once existed between different blockchain ecosystems, fostering cross-chain interactions that were previously unimaginable.

For example, the liquidity network Connext is pioneering the implementation of the xERC-20 token standard. xERC-20 tokens are a new token standard proposed as Ethereum Improvement Proposal (EIP) 7281. They are designed to empower token issuers with greater control over the "canonical" minting of tokens. The term "canonical" here refers to the official and authorized version of a token minted across different blockchain networks. The primary goal here is to enhance security in DeFi by reducing the risk of bridge hacks. This allows token issuers to maintain a curated list of official bridges. Only these official bridges are permitted to mint the canonical version of a token, subject to permission from the token issuer. This reduces the chances of unauthorized minting and potential vulnerabilities. Hence giving greater control over the issuance of their tokens across different networks.

This is similar to what Composable Finance is doing with the infrastructure. The Cosmos-based DeFi interoperability platform is leveraging the Inter-Blockchain Communication (IBC) protocol to connect Cosmos SDK chains and DotSama parachains via Centauri in what they are calling the "First Trust-Minimized CosmoDot Connection". This infrastructure allows users to seamlessly move funds and transact between two separate autonomous blockchain ecosystems. It also allows developers to leverage technologies on both networks to create protocols with cross-chain functionalities.

These innovations open the door to a new world of possibilities, unlocking potential applications that span multiple blockchains and ecosystems.

Credit: defiprime

Account Abstraction and Smart Contract Wallets

Another stride forward is evident in wallet advancements prioritising security and ease of use. Wallets like Metamask have evolved from mere repositories of digital assets to sophisticated portfolio management tools equipped with robust security features. Enhanced authentication mechanisms, cold storage solutions, and multi-signature capabilities have collectively fortified the protection of users' assets, laying a solid foundation of trust upon which the new era of applications is being built. Moreover, innovative solutions like account abstraction are emerging, enabling smart contracts' seamless integration into crypto wallets. This development opens up a world of possibilities for users, as they can now:

  • Define their unique and adaptable security rules.

  • Recover their accounts in the event of key loss.

  • Share their account security among trusted individuals or devices.

  • Facilitate the payment of another user's gas fees or have someone else cover their own.

  • Group multiple transactions together, streamlining actions like approving and executing a swap in a seamless process.

Account abstraction, also known as ERC-4337, is a next-level update that will introduce a much smoother experience for users and improved security because it enables support for smart contract wallets at the protocol level. Most importantly, it will also give developers much more freedom to innovate on the user experience.

Scalability: A rollup-centric future

While this seems like old news, rollups, and layer 2 scaling solutions constitute yet another milestone that addresses a long-standing challenge—blockchain scalability, these solutions offer a pathway to alleviate the scalability bottlenecks that have hindered the widespread adoption of blockchain technology. By processing transactions off the main chain and later reconciling them, rollups and layer 2 solutions like Arbitrum, Optimism, Polygon, and most recently, the Base network etc., have paved the way for faster, more efficient, and cost-effective interactions on the blockchain.

Optimistic rollups like Arbitrum and Optimism are increasingly making strides in the technology stack. Optimism's OP stack has seen huge success in adoption. The modular open-source development stack provides a highly customizable framework for building L2 blockchains. Anyone can quickly spin up an L2 blockchain. This not only makes it easy, accessible and more efficient. It also increases interoperability between these blockchains. The Base network is a popular example here. The Base network and other chains like Magi being built using the OP stack fit into the Superchain thesis, an architectural framework for standardizing blockchain networks. This abstracts away technical nuances between chains and significantly increases interoperability by creating a singular unit made up of a network of chains. The Superchain is Optimism's version of the app-chain thesis on Ethereum, similar to what Cosmos is doing with the Cosmos SDK.

Similarly, Arbitrum's Orbit tech stack allows developers to deploy a custom layer 3 network on top of Arbitrum. While Optimism is scaling the Ethereum network using the OP stack, Arbitrum is doing it vertically by adopting the L3 approach. Other rollups are not left out. Polygon recently launched its zkEVM technology and subsequently has deployed the Polygon Chain Development Kit (CDK), which, similar to the OP stack, allows developers to easily build their customizable L2s by leveraging the zero-knowledge (ZK) technology.

Collectively, these milestones form a solid foundation of innovation that underpins the transformative phase we find ourselves entering. They embody advancements in technology and shifts in how we perceive and engage with the crypto landscape.

Ecosystem Diversity: Beyond Ethereum's Pole Position

Ethereum, Cosmos, and Solana have stood out for their unique ideologies and priorities, especially towards tackling the blockchain trilemma problem. Ethereum aimed to decentralize the internet, Cosmos strived for multi-chain interoperability, and Solana prioritized unparalleled scalability. As these blockchain ecosystems have grown, they've adapted and, in some ways, converged on similar solutions.

These blockchain ecosystems have traditionally focused on improving one aspect of the scalability trilemma: scalability, decentralization, or security. However, their recent efforts aim to balance all three factors. Validators play a crucial role in blockchain operation by providing services and ensuring network integrity. These blockchain ecosystems hold diverse views regarding the significance of solo validators. Solana, for instance, holds the belief that hardware advancements will ultimately enable more accessible validation, emphasizing scalability as a key goal. In contrast, platforms like Cosmos and others prioritize the adoption of light clients validated by multiple users. This approach serves as a compromise between decentralization and performance, reflecting their commitment to striking a balance between these two critical aspects of blockchain networks.

The Cosmos State

The Cosmos ecosystem represents a significant advancement in blockchain technology, positioning itself as the third generation of blockchains after Bitcoin and Ethereum. At its core, Cosmos empowers developers to create custom, application-specific blockchains that can interconnect seamlessly, fostering a network of specialized chains capable of exchanging data and functionality. One of Cosmos' standout features is its modular architecture, which breaks free from the traditional paradigm of building decentralized applications (dApps) on foundational blockchains. Developers within the Cosmos ecosystem have the flexibility to design and deploy independent blockchains tailored to their precise needs while benefiting from the robust security provided by the Tendermint consensus algorithm.

Unlike Ethereum's reliance on smart contracts for dApps, Cosmos liberates Web3 developers from these constraints. Instead, it allows them to create blockchains that meet their specific design requirements. Interoperability is a key focus of Cosmos, addressing the longstanding challenge of enabling communication between blockchains with distinct consensus mechanisms and coding specifications. This is achieved through the Inter-Blockchain Communication (IBC) Protocol, facilitating seamless interaction between diverse blockchains. Moreover, Cosmos is actively working on "pegg-zones," bridging its ecosystem with external projects, thus enhancing cross-chain capabilities. The IBC protocol is a prime example of innovation in action, facilitating seamless interaction and interoperability between various blockchains within the Cosmos network. By enabling frictionless communication between disparate chains, the IBC protocol emphasizes the importance of interconnectedness—a facet essential for the holistic growth of the crypto space.

The Solana Force

Additionally, the Solana ecosystem has made significant strides with its technological breakthroughs. With innovations such as the Tower BFT, Turbine, Gulf Stream, Sealevel, Pipeline, Cloudbreak, and Archivers, the Solana blockchain boasts a highly efficient and scalable technology stack for builders seeking more flexibility than Ethereum enables. Despite several setbacks and struggles in its development, Solana has shown remarkable resilience, and its unique approach to blockchain solutions makes it a palatable alternative. This is why the team at MakerDAO is considering deploying their native blockchain "NewChain" on the Solana codebase instead of Ethereum. Solana's claim to fame lies in its impressive scalability and transaction speeds. The proof-of-history (PoH) consensus mechanism, coupled with its Proof-of-Stake (PoS) layer 1 architecture, has led to a thriving NFT ecosystem and the emergence of applications that offer real-time experiences, transcending traditional blockchain limitations.

Decentralization is a common goal for Ethereum, Solana, and Cosmos, although they have different approaches and trade-offs. They all strive to create robust, censorship-resistant networks that cater to specific communities and shape their respective values. Ethereum sits between Cosmos and Solana, using a single security chain with the vision of spawning app chains from it. Economically, Ethereum's modular setup and the ability to establish its own currency as the network's primary unit give it an advantage over networks like Cosmos and Solana.

The world's innate proclivity for entropy serves as a catalyst for innovation. Chaos begets creativity; disorder fuels the human drive to devise solutions, and innovation thrives within this constant flux. The chaotic and ever-shifting landscape of technology mirrors the entropy principle. In this dynamic environment, breakthroughs emerge as responses to the challenges posed by entropy. Blockchain technology is no exception. Therefore, by acknowledging the contributions of ecosystems like Cosmos and Solana, we highlight the strength of the collective crypto narrative. Each ecosystem adds a distinct brushstroke to the canvas of innovation, shaping a narrative that transcends singular platforms. This diversity emboldens us to challenge norms, provoke creative thinking, and fuel an era of user-centric applications.

The Emergence of Breakout Apps: The Dawn of User-Centric Crypto Applications

After a series of foundational technological innovations, the crypto landscape is now witnessing a significant shift—an era marked by the rise of user-centric applications that leverage the groundwork laid by earlier advancements. These new breakout apps signify a pivotal moment in the industry, exemplifying the practical outcomes of the technological progress that was once theoretical.

As the spotlight shifts from protocols to the people, innovative end-user-focused projects like Rollbit,, and Farcaster have seized the moment. These platforms exemplify the evolution from utility to experience, embracing a holistic approach that places users at the heart of their design. They introduce novel concepts, from tokenizing social networks to reinventing trading and fostering decentralized social interactions.

User-focused applications like, UNIbot, Farcaster, and Rollbit encapsulate the journey from abstract concepts to tangible solutions prioritising user needs and experiences. For example, has revolutionized social media interaction by enabling users to tokenize their social networks. The rapid adoption of, with around 80,000 unique users within just ten days of its launch, underscores the demand for a more user-centric and ownership-driven social networking experience. Similarly, UNIbot's emergence responds to the evolving trading landscape. By allowing users to trade cryptocurrencies directly from Telegram apps via Uniswap V3, UNIbot simplifies trading, making it accessible to newcomers and experienced traders. This convenience-driven approach reflects the desire for seamless and straightforward interactions. Even beyond the Ethereum ecosystem, platforms like Rollbit, built on Solana, serve as another prime illustration of advancements away from core infrastructural developments. Rollbit demonstrates how user-centric designs can enhance utility and entertainment. Its intuitive interface and swift transaction speeds showcase the practical impact of blockchain scalability and innovation.

These applications extend beyond technology—embody a tangible shift in the industry's trajectory. The adoption achievements of these platforms underline the market's appetite for solutions that align with their demands. The swift user engagement with these platforms attests to the industry's readiness for user-centric innovative solutions.

Challenging the "Fat Protocol Thesis"

Once upon a time in crypto, the "fat protocol thesis" put forward by Joel Monegro stood as a prevailing notion, asserting that the lion's share of value accrual happens at the protocol layer, overshadowing the applications built upon it. This concept posited that the foundational protocols, such as blockchain networks, held the key to value accumulation, relegating applications to a secondary role. However, the current landscape is steering this perspective into uncharted territories, challenging its foundations. The ongoing transition we're witnessing starkly contradicts this thesis. The advent of user-centric applications marks a pivotal shift, thrusting the spotlight onto the applications themselves rather than merely confining it to the underlying protocols. These applications represent a paradox—a phase where the perceived hierarchy between protocols and applications is not merely blurred but has evolved into a complex, interdependent relationship. The emphasis has shifted beyond the protocol's thickness; it's about applications' utility, usability, and intrinsic value.

The fat protocol thesis found its basis in the early years of blockchain, where the focus was indeed on building the foundational infrastructure that enabled decentralized trust and value transfer. However, as the crypto landscape matures, we find ourselves in a paradoxical phase where the perceived hierarchy has shifted. Applications are now at the forefront of innovation and value creation, challenging the established norm. These applications aren't merely passive players riding on the coattails of protocols; they actively shape the user experience, dictate adoption rates, and influence the direction of blockchain technology.

Imagine the blockchain ecosystem as a bustling city. According to the "fat protocol thesis," the city's infrastructure—the roads, buildings, and utilities—takes precedence in generating value, with the residents and businesses—the applications—playing a secondary role. However, the present shift redefines this narrative. It places the inhabitants and enterprises at the forefront, recognizing that their activities, interactions, and contributions collectively shape the city's vibrancy and economic dynamics. This transition highlights the reality that thriving, active users within applications are integral to the overall value proposition of the ecosystem.

This transformation in perspective is facilitated by the evolution of infrastructure and the proliferation of diverse ecosystems. The technological strides, including bridge innovations, Layer 2 scaling solutions, and interoperability mechanisms, have democratized the ecosystem. No longer is the value confined solely to the foundational layers; it now permeates every facet, with applications as conduits connecting users to the blockchain landscape. The rise of platforms like Friend. tech, UNIbot, and Rollbit exemplify this phenomenon. These applications are vivid examples of how users and their interactions within applications contribute to a thriving ecosystem. Friend. tech's novel approach to social media, UNIbot's trading accessibility, and Rollbit's gaming innovation showcase that it's no longer just about the infrastructure—it's about empowering users to engage in ways that were once thought impossible.

This paradoxical shift is a testament to the dynamic nature of the crypto journey. It's far from a linear progression where protocols alone reign supreme. Instead, it's a journey marked by continuous twists and turns, where innovation and adoption redefine the landscape continually. As we navigate this paradox, we discover that protocols and applications are integral to the crypto narrative, but they no longer exist in isolation. They share a symbiotic relationship, each playing a unique and essential role in shaping the future of this ever-evolving ecosystem.

Protocols provide the foundational trust and security upon which applications are built. They establish the rules, consensus mechanisms, and security measures underpinning the blockchain infrastructure. However, without applications that leverage this infrastructure to solve real-world problems and enhance user experiences, the protocols alone would remain abstract and inaccessible to the broader population. Conversely, applications bridge the gap between the technical complexities of blockchain protocols and the end-users. They create tangible use cases that bring blockchain technology to the masses. They cater to the diverse needs of users, from decentralized finance to social networking and beyond. Applications drive adoption and, in doing so, validate the value of the protocols they are built upon.

In this paradoxical interplay, the crypto ecosystem thrives. The future of blockchain technology isn't about favouring one over the other; it's about recognizing the symbiosis between protocols and applications. It's about understanding that the strength of this ecosystem lies in the synergy between innovation at the protocol layer and user-centric solutions at the application layer.

Building the Future on Crypto Rails

The transition from protocol-layer value to application-layer value is a notable departure from the "fat protocol thesis," indicating a paradigm shift that aligns more with the needs and experiences of users. This is the future. As we look ahead, it's clear that the crypto landscape's evolution is an ongoing journey of continuous discovery and innovation. The story is far from concluded, and the opportunities are boundless. This is a call to action for everyone in the crypto community to contribute to the narrative by exploring new applications, envisioning novel solutions, and actively shaping the future of this dynamic ecosystem.

While some champion the steadfast activism of crypto's early days, I stand in favor of a more inclusive and pragmatic approach. It's crucial to recognize that crypto's impact transcends a select few; it can potentially revolutionise countless individuals' lives worldwide. Cryptocurrencies have evolved beyond mere activism, giving rise to innovative, user-facing applications like Friend. tech, Rollbit, and UNIbot. These platforms bridge the gap between the crypto-savvy and the everyday user, propelling us toward a future where blockchain technology seamlessly integrates into daily life. While the activism narrative is essential, it alone cannot unleash crypto's full potential. True power lies in accessibility, empowerment, and mass adoption. Restricting crypto to a niche following would limit its ability to break barriers and fulfill its revolutionary promise. Embracing user-centric applications is not a deviation from the dream that ignited this movement; it is realising that dream on a grand scale.

In this journey, let us remember that crypto's strength lies in its ability to include, not exclude, and to explore boundlessly, not limit. By championing these applications, we unlock the door to a future where crypto's impact is felt far and wide, aligning with the ethos that has driven this remarkable journey from the start.

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