Episode 80: Conversation with Evan Mair gCC gumi Cryptos Capital

MikoBits Blockchain NFT and DeFi show

History and Future of DeFi

170 billion in TVL across all the all the different chains. We've come a long way in just one year and even more since since 2017, when a lot of these projects initially started kicking off. I think what's what's important to note is that this has been an iterative process, and in crypto things happen very quickly.

So it's been great to invest over the last three years at Gumi cryptos Capital on work with founders who are in this iterative process of improving how either tokens are distributed, how networks are bootstrapped, how talent is sourced and everything in between how DAOs are formed.

And so this whole DeFi, boom, you could call it kind of kicked off back in, in June 2020, when compound started the first liquidity mining program, although some people credit synthetix was before. But compound was the first one to really popularize this, back in the day. And since then, we've seen this exponential growth that's been super exciting. And I wrote an article I think, in October 2020, on this distribution mechanism, called the ownership experience, and how that will impact users over the next decade and beyond.

How instead of focusing on building a nice UI, you essentially are focusing on how what is the best way to distribute ownership of these protocols that will be user owned and operated in the future. And I think that's a trend we will continue to see. And that's what's leading to this explosive growth in DeFi. In terms of what's really exciting me now, it's the activity in the sidechain layer two space.

Essentially, you've got in the last couple of months, you've had a couple networks launch that are starting to gain traction, you've got optimism, and Arbitrum, on the optimistic roll upside, and you've got a starknet and Starkware on the Zk rollup side. And just a high level if people are watching and don't know what these roll ups are. A roll up essentially aggregates transactions that executes them and stores most of the data off chain, and then stores a little bit of the data of the proof of that transaction on the main chain.

So optimism, and Arbitrum use optimistic roll ups, which essentially assume that the transactions are correct. And they're essentially it's essentially secured by incentives. Whereas something like Starknet or Starkware zk roll ups, which is essentially enforced by math (zero-knowledge proofs), so there's different ways to have these enforcement mechanisms.

But the nice thing is you essentially, get scalability on the second layer while still inheriting the underlying security of layer one. So naturally, a lot of users are migrating to these platforms, including myself, and using the applications built there like AAve and maker DAO and a couple of others are on arbitrum. From you've got synthetic on optimism, I think uni swap is on both at this point, and tons of applications are being built there.

And you can see the Gas fees are a lot less, but you're still, you know, inheriting that underlying security. So people are a lot more comfortable moving there. There are other chains like Matic that are super interesting now called polygon, that, that have a little bit different security trade-off. But because of that have a lot lower cost. You also have different blockchains, like Solana that are kind of popping up and offering new DeFi experiences and attracting TVL, but also have similar similar trade-offs on performance and security.