Sam Bankman-Fried sat down with Boxmining on 11th August 2020 and shared his thoughts on the Decentralised Finance (DeFi) space, its future, and Serum. In particular, he talked about how he sees the DeFi will look like moving forward, and how Serum fits the needs of the crypto community.
DeFi — An Optimistic Forecast
Sam believes the DeFi space is in for a promising run in the days to come. He is bullish on the potential of DeFi now because it wasn’t what it used to be.
Now, there are features like Compound Finance’s on-chain governance that he found to be “pretty cool”. And with such developments in place, users not only have control over protocols, but they can also make powerful applications on top of them.
On the flipside, Sam believes there are still a lot of problems in the space which he referred to as “hot air”. This means that there are a lot of projects that do not actually provide the service that they promised.
He even noted that today still feels reminiscent of the late-2017 Initial Coin Offering (ICO) hysteria, where bubbles were created one after another by projects that were actually “crap”. But hopefully when all the hot air dissipates, what will remain are good DeFi products.
DeFi Trend Could Potentially Mirror Wall Street
Sam talked about his experience at Wall Street. It is not so different with those that are in DeFi, he said. But in Wall Street, there are a lot of irrelevant middlemen who charge expensive fees for mediocre services.
If anything, most of what they do is just matching customers and stocks. And even so, he believes that they are often done in a nepotistic way. A similar case is happening in the cryptocurrency scene, with some amazing and terrible stuff happening in between. But Sam is hopeful that there could be a decrease in the trend of hot air in the coming years.
Sam thinks that hot airs and bubbles will just happen in crypto. But when bubbles begin popping one by one and people start dumping their coins, it is important to look at who’s still really left with a good market cap, token, and volume.
How to Keep Crypto Projects in Check?
Sam said that one way to ensure that crypto innovations really work is to enforce norms of posting real and relevant statistics. From that metric, comparisons between projects and their different competitors can easily be made. In recent years, we’ve seen a lot of exchanges put up fake volumes just to lure people into giving up their assets.
Back then, even data aggregator websites gave bad information and were not able to discriminate fake exchanges from real ones. An individual to be very knowledgeable about crypto or at least sophisticated enough to tell what’s real and what’s not. But for the newbies, identifying whether a coin’s volume is real is still questionable.
That is why a lot of people still get lured into using exchanges that turn out to be fake. Most of them are just deceptive. And the only way to combat it is to enforce the norm of real and relevant statistics.
How to Assess DeFi Projects?
A lot of discussions have been going on about how best to assess whether a DeFi project can really live up to their claims. One metric that a lot of people look into, which Sam also raised, was the ‘total value locked’ (TVL).
Total value locked could reflect how much people want to use a particular protocol. But the problem, however, is when people are simply paid to lock up their funds in a protocol without any other benefit at all. In such a case, value locked is not going to say much about the people’s belief in the promise of a protocol.
And when the community starts testing too much for metrics, some people begin trying to game it. Sam said that while total value locked has been a great metric, it does not work anymore at present. Fake metrics will always try to catch up with the real ones.
What is Project Serum?
Sam admitted that when their team first worked on Serum, they were just “half-assing” it. At the time, they were just riding through the DeFi season. But ultimately, the goal was to respond to the community’s need for an exchange that is fast, secure, and interoperable.
When work in Serum went deeper and more serious, they discovered a series of bottlenecks that made its take-off difficult. Building on the Ethereum network was still slow and expensive. And it is a problem when you are trying to create a fast, affordable and interoperable exchange platform with an order book, matching engine and limit orders.
The aim was to build a new decentralized exchange on a fast blockchain which can operate in all other blockchains. A\
How was Project Serum developed?
Sam said that the first problem that they had to address was transaction speed on different blockchains. Bitcoin is very slow and Ethereum is 10x faster but can only process 7 transactions per second. Whether it can handle so much more stress when smart contracts are already in place is still uncertain. Sam adds that the Ethereum blockchain just can’t support their aim to build an ecosystem.
Their vision is to create a decentralized exchange that anyone in the world can freely access. And the only option that they had in order to achieve it was to build it on Solana.
What separates Project Serum apart?
Solana is a fast blockchain that can process transactions hundreds of times faster than any other network. This means that it can support a whole ecosystem around it, including multiple other exchanges. It was designed for speed and efficiency, fitting exactly what the Serum needs.
Serum’s objective is to create an interoperable platform where anyone can build an entire derivatives exchange, use market making engines, and achieve liquidity.
With Solana, Serum can build a platform that users can easily plug into any other blockchain.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. We also take a deep dive into popular DeFi topics such as Yearn.finance ($YFI), Balancer ($BAL) and ($COMP).
The DeFi series on this website also covers topics not explored in YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency
Learn about Yearn.finance ($YFI) and all its various hard forks and iterations:
- Yearn.finance ($YFI) farming with yEarn Pool
- YFII Yield Farming- the controversial $YFI Fork
- YFFI Yield Farming – Another fork of the popular yield farming Dapp
- Andre Cronje, Founder of yEarn.Finance ($YFI) talks DeFi with FTX
For in-depth information other specific DeFi projects, check out our DeFi token guides:
- 0x ($ZRX) guide: The future of cryptocurrency exchanges?
- AAVE ($LEND)
- Ampleforth ($AMPL) review: The essential guide to this DeFi protocol
- Bella Protocol ($BEL): One-click crypto banking
- Balancer Finance Guide and Review ($BAL)
- ChainLink ($LINK) guide: A key link in the DeFi space
- Compound Finance ($COMP)? A guide to hacks and tips on the latest DeFi platform
- Cream Finance ($CREAM): What is it?
- Curve Finance ($CRV) guide
- DeFi Money Market and DMM Governance ($DMG) guide
- FalconSwap ($FSW) Guide
- Fuse Network ($FUSE): What is it?
- Hedget ($HGET): Does it live up to the hype?
- Kusama ($KSM): How is it Polkadot’s wild cousin?
- Linear Finance ($LINA): The future of synthetic exchange platforms?
- Mantra DAO ($OM): The DeFi project that’s all about community
- OIN Finance ($OIN): DeFi’s first foray into Ontology
- Orion Protocol ($ORN) explained
- Polkadot ($DOT): Everything you need to know about the DeFi darling of China
- RAMP DeFi: How does it unlock the value of staked assets?
- Rio DeFi ($RFUEL): The next frontier of finance?
- Serum ($SRM): First look at FTX’s new DEX for the DeFi wave
- Solana ($SOL) explained
- SushiSwap ($SUSHI) explained
- Synthetix ($SNX): Everything you need to know about this top DeFi project
- THORChain ($RUNE) information and guide
- Trustswap ($SWAP) explained- Next generation of DeFi transactions
- YF Link ($YFL): Combining the best of ChainLink ($LINK) and Yearn Finance ($YFI)?
- YFV Finance Yield Farming
Tutorials and guides for the ESSENTIAL DEFI TOOLS:
- MetaMask Guide: How to set up an account? PLUS tips and hacks for advanced users
- Uniswap review and tutorial: Beginners guide and advanced tips and tricks
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel and (for now) FREE weekly newsletter so you can be notified as soon as they come out!
The information provided in this article is intended for general guidance and information purposes only. Contents of this article are under no circumstances intended to be considered as investment, business, legal or tax advice. We do not accept any responsibility for individual decisions made based on this article and we strongly encourage you to do your own research before taking any action. Although best efforts are made to ensure that all information provided herein is accurate and up to date, omissions, errors, or mistakes may occur.