đThe Current State of DeFi: Problems
In a world full of financial complexities, One Click Labs was born out of a simple vision: to make DeFi products not just accessible but effortless for everyone. We recognized the paradox of choice and the paralysis it can induce. With a plethora of yield farming pools, airdrop programs, and liquidity/staking opportunities, the average user is often overwhelmed, if not entirely deterred. Our mission is to facilitate DeFi adoption by demystifying these complexities, and creating simple easy-to-use web3 products, thereby bringing more users and capital into the web3 universe.
Problem 1: Disconnected & Fragmented Information
DeFi is growing fast, really fast. Every week sees the launch of 22 new DeFi protocols and L1/L2 blockchains on average. Based on Defillama, today we have 246 blockchain networks, over 3,346 DeFi protocols, and more than 10,546 yield-generating pools. But this is just the tip of the iceberg. The current DeFi trackers are only capturing about 1/5 of the total DeFi universe, suggesting there might be so many opportunities located below the radars of online dashboards.
For the average person, whoâs not glued to their crypto screens all day, the pace is overwhelming. New opportunities, like airdrops, come and go so fast that if you blink, you might miss out on whatâs basically free money. Itâs like almost every new blockchain layer is throwing out a welcome bonus, but only those in the know can catch it.
Right now, if you are a DeFi user, you have to juggle between a dozen browser tabs, countless Telegram channels, and hundreds of Twitter feeds just to stay in the loop. Itâs a lot, and itâs messy.
The composability of DeFi is both a blessing and a curse. The fact that you can interconnect various DeFi protocols with each other offers a great opportunity to create more comprehensive decentralized financial systems, but this creates an additional layer of complexity for an average joe. The terms like LP, impermanent loss, frontrunning, or vote-escrowed governance, donât help either.
Problem 2: High Risks & Opaqueness of Risks
Everyone whoâs been in crypto long enough lost money. It could have happened due to hacks, exploits, wallet drainers, scams, shitcoins, or just poor investments. More than $79 billion was lost in DeFi. Itâs almost accepted as ânormalâ in DeFi. But it doesnât have to be this way.
A big part of the problem is that most DeFi projects donât talk much about risk. Theyâre quick to tell you about the profits you could make but tend to skip over what could go wrong. And thatâs a big missing piece. When youâre putting your money into something, you should have a clear picture of what the risks are.
Users often ask, âWhatâs the best DeFi opportunity right now?â and âCan I trust this project?â They want to know the risks and what they might earn back as a return. But finding clear answers to these questions isnât easy. Thereâs a need for transparency about the risks in DeFi, and so far, itâs not being met.
Problem 3: Clunky UX
The Challenge of Overwhelming Interfaces
DeFi today is like walking into a room where everyone is talking at once. Youâve got information on yields, liquidity pools, and token swaps coming at you from all sides. Itâs a lot. For instance, a DeFi platform might show you 10 different numbers and percentages for a simple deposit, but which one do you need to care about? This information overload isnât just confusingâââitâs a roadblock for people who are new to DeFi.
The Necessity for Intuitive Design
When it comes to design, less is often more. The best tools out there are ones that donât make you think too hard, like Googleâs search bar. Itâs a model of simplicity. Thatâs what we need in DeFi: a clean, straightforward design that anyone can understand at a glance. No one should need a manual to figure out where to click to make a deposit or check their balance. An intuitive interface isnât just nice to have; itâs crucial for bringing DeFi to a wider audience.
The Grandma Test
Think about your grandma using DeFi. Could she make a trade or lend her tokens without calling you for help? Thatâs the âGrandma Test,â and right now, most DeFi platforms would fail it miserably. The best test of a productâs user experience is whether it can be used by someone with no prior knowledge of the subject. If we want DeFi to be as big as the internet one day, it has to pass the Grandma Test.
Problem 4: Cross-chain Friction
Imagine youâre shopping online, but each item on your list is sold in a different store, and every store is in a different city. Thatâs what dealing with multiple blockchain networks can feel like. You might find a great yield opportunity on Ethereum, but the next day, thereâs a better one on Arbitrum. Keeping up isnât just tough; itâs a full-time job. For example, to move your assets from one chain to another often means navigating through a maze of wallet addresses, bridge services, and sometimes even different currencies.
Moreover, each chain has its own set of rules and gas fees, which can eat into your profits if youâre not careful. Transferring tokens between chains can get expensive and risky, as the bridge platforms themselves can be points of vulnerability. In July last year, a major cross-chain bridge was hacked, leading to a loss of over $190 million worth of cryptocurrency. This kind of news can discourage even the most enthusiastic DeFi user.
The cross-chain issue isnât just about convenience; itâs about security and cost-effectiveness too. Without a solution, DeFiâs growth could stall, with users sticking to what they know rather than seeking the best opportunities.
Problem 5: Variable Yields
DeFi yields are about as stable as the weather in the mountainsâââbright and sunny one moment, a downpour the next. You might put your crypto into a pool thatâs offering a great annual percentage yield (APY) of 30%, but just a week later, it could plummet to 10%. Itâs unpredictable. To stay on top of this, you need to be constantly on the lookout, ready to move your assets to where the yields are best.
Itâs like having a job where youâre on call 24/7. You need systems to alert you the moment yields change, and then you have to act fast to rebalance your portfolio. And thatâs not even touching on impermanent loss.
Managing a DeFi portfolio is like jugglingâââyouâve got to keep your eyes on all the balls at all times, or else youâll drop them. Itâs intense, and for many, itâs too much. Without the right tools to manage these changes automatically, most people are just watching from the sidelines.
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