What needs to happen for our DeFi Ecosystem ASAP?

Awesome topic, agree on everything! I would like to elaborate on the points provided:

1. Stablecoins:

We would like to have some sort of ecosystem program developed where there is support for native stablecoins: In my vision it should entail following areas:

Liquidity program to bootstrap initial stablecoin supply. This relates to Liquidity point and all of the liquidity avenues apply here as well.

  • Parity/ Polkadot Treasury could play a bigger role here in bootstrapping native USDT and native USDC liquidity in the ecosystem.
  • It could either be 1) Parity working with funds to deploy native USDT/USDC liquidity in ecosystem DeFi projects, or 2) Polkadot Treasury to give out loans in the form of native USDT/USDC (instead of DOT) to ecosystem DeFi projects to help bootstrap liquidity.

UI hub for AMMs and stablecoin swaps, minting, trading, using that freshly minted liquidity across the ecosystem. IMO it will allow retail users to at least see all of the options in one place. May be working closely with subscan / subwallet here on providing such features.

A group of market makers who are explicitly willing / aiming to work with the ecosystem and make markets both on CEX-es and DEX-es

2. Bridges:

Currently in an absence of the common solution a lot of teams are engaged in building their own setup, which could be broken down into two broad categories:

  • Solutions based on Chainsafe’s Chaindrige (Sygma) pallets
  • Solutions based on EVM-based bridges + XCM (Multichain, Axelar, Celer, Synapse, Wormhole, LayerZero, Wrapped)

For starters I see a good opportunity in providing a unified UI hub for all the possible options, where users will have a choice: how and where their external liquidity ends up in the ecosystem, I believe this endeavor should be pushed through the grants program.

I know a lot of people / teams are waiting for Snowfork, but it’s best when we have several options at the table. There was an interesting discussion about this topic here, yet I think it would be optimal if parity started engaging with the above-mentioned teams to build pallet / native bridging solutions directly. We have to be aggressive here, as none of the teams we spoke to see Polkadot as their priority, so maybe think of some incentive program here.

Basically, I see it as a common good parachain (statemine?) where all the bridges are connected to and where all the bridgeable assets originate, we could further think of and develop diversification schemes to reduce the risk of a single bridge hack as described in the abovementioned post.

3. Wallets and Custodians

The main obstacle here is the need from the wallet side to support different data models for different parachain architectures. Also, there is no solution which supports both EVM and non-EVM chains (there is Encrypt wallet but they charge very high fees for integration, maybe it’s best to approach them as an ecosystem?)

We experience real difficulties with integration, as our architecture is not similar to the widely used ORML module.

4. Liquidity

Lots of problems here:

  • No initial bootstrap, limited options, hard to attract institutions / whales.
  • No ecosystem-friendly market makers willing to work with DEX
  • Fragmented bridging and limited outside liquidity options
  • Hard to compete with bigger, better funded projects and high APRs when doing liquidity bootstrap campaigns
  • No listing support from parity, no common pool of CEX-es working with the ecosystem as a whole (+ problems on side of CEX-es supporting various parachain integrations)

5. XCM

Strongly in favour of the centralised documentation / roadmap on XCM. One thing we lack in particular is the ability to read storage data of other parachains / pallets via XCM.

9 Likes