One of the lessons I've learnt from reading various finance and business contents over the years is that to create a better system, one must first understand the value of an existing one, replicate that value and build a second layer that breathes life of "extra utility" on it.
To better frame that, simply put: Ask questions about why an existing system works then recreate that but with something that tackles its flaws or at least, makes the existing one seem like it was flawed.
Funny last line right?
That's simply the nature of business and basically the way the world works. If you can't find a problem in a system, you have to engineer one then step in to save the day with your solutions.
With crypto, there's a lot of problems that need to be solved, but for some reason we focus more on the problems that need solving - most times all at once - that we miss seeing what works, profitably to say the least.
This is why we find various projects developers constantly wasting time trying to create things like a token-backed governance structure that would have no whale advantage. Don't get me wrong, the idea of having a token system where "account A" can influence the governance of the network in no way greater than "account B" sounds promising, at least in the eyes of "democracy".
I've personally theoritize numerous ways to accomplish this but the reality always remains that the token should either lack "economic influence" or be liable to crises. And you wanna hear something funny?
Even without having a market value(as though this is the intended "economic influence(value)" mentioned above), a governance token is really still, at the very basic, a great economic influence. I mean, what's being governed? The network yeah?, and what does the network do? That's right, create value - more specifically, economic value through developments.
One would still wonder what would actually make such a system a failure. Well, there are no incentives to provide more value to a network you can only influence in no way more than someone that does zero work, so that really just poses an attack vector that people will seek other ways to control the system and with crypto's design enhancing anonymity, that really just aids the execution of such plans.
DeFi's missing rib
Brethren, Let us pray.
We are gathered here today to ask that the Lord blesses DeFi with its missing rib, that we suffer no more in the hands of an overreaching government, Amen.
Did you pray?
The missing rib is sustainable lending protocols, an advancement to what we have tokens across DeFi platforms. DeFi needs to deploy ways to expand our value flows without sacrificing security, whether on the economic or network level.
The banking system currently works and still has an advantage over crypto because of its rich credit line. The current crypto lending protocol is quite restrictive and yet still largely "risky". Some of these projects seem to think that overcollateralized loans will solve everything.
Well, we cannot really blame them because they are largely narrow minded and focus so much on "short-term" gains but they get the opposite results because I mean, crypto is largely volatile, though you may predict a 6 month stable market gap from a user's deposits before a loan contract could get liquidated, but the reality is that even with your over 40% collateralization, that loan can still freaking get liquidated in a shorter time frame.
So this leaves these networks largely unsustainable because firstly, crypto is volatile and they simply focus on maximizing profits from each depositor as opposed to playing the cards of expansivity.
The banking system does not require a "Apple-type business model", it requires a "Google business framework" because the larger the network of users, the more sustainable and profitable this shit will be. Spreaded risks brings protocol security.
Until DeFi can capture a wider audience through tokenomics that allows expansivity, it will still run as an underdog in the world of banking transactions.