On December 8, Radix CEO Piers Ridyard led the keynote address for RadFi 2022: The Future of DeFi Unveiled. It was a bit different than other keynotes I’ve heard as Piers started his talk by stating that DeFi, in its current form today, is “shit.”
And the more he discussed why he feels this way, and what he and his team are doing about it, the pieces started to fall into place. Frustrating experiences, confusion, and anxiety over whether a transaction (or an entire platform) will fail. These aren’t the hallmarks of a well oiled machine. And as he stated, the early adopter attitude is one of high expectations, and the ability to see what is possible. This, as they say, covers a multitude of sins.
I think the most compelling argument about the current state of DeFi was pinpointing exactly where it is in the New Technology Evolution process. He shared examples of other technologies, how their promise was much larger than their practical use cases. He explained what brought them over the obstacle, and how the growth quickly became exponential once a mainstream audience began to mass adopt the technology.
So where exactly is DeFi in this process? And what is Piers and his team at Radix doing about it? Let’s find out.
The Problem
“There’s about 20,000 smart contract developers working full-time in DeFi and Web3. That’s great, but it’s a fraction of the 27 million developers worldwide. In just two years, DeFi grew from a billion dollars under management to over $200 billion. That’s incredible, but still just a rounding error on the $400 trillion global financial system.”
This is a key point. We who have been involved with DeFi over the last several years have seen a massive explosion in the people, the money, the platforms, and the use cases that have swarmed this industry and made it what it is today. The problem is, our personal experience has tainted our perspective, because DeFi is still nothing compared to the scale of TradFi (much less than 1%). Why is this? We understand the potential of DeFi. Why aren’t many more people using it?
The answer is two-fold: It’s not safe, and it’s not intuitive. And before you argue with these points, realize that you are very likely not representative of a mainstream user. If you’re reading this, you’re almost certainly part of the early adopter crowd, willing to put more effort, more learning, and more risk into using this new technology.
The great news is, we’ve seen this cycle many, many times. Piers calls it out, using gaming engines as an example. Before Unity and Unreal, developers were on the hook to figure out all the low level elements that every game has to have. But these game engines took care of the vast majority of the non-value added (but necessary) elements; things like rendering and physics engines, UI’s that made sense and were intuitive, libraries of assets and art and code. Looking at the gaming industry pre- and post-game engines paints the picture: by taking care of the 80% of absolutely critical, but absolutely complicated and boring elements, the engine was a power boost to the industry. Now it wasn’t just talented programmers who could create games, but people who were artists first and had a specific vision in mind could now turn that into reality.
As Piers discussed this, I realized that I have experienced this model in action several times: once all the way through the evolution, and several times where the evolution is stuck at the same point as DeFi. When the internet first hit the early adopters, being able to create a website was a near mythical skill. I learned to code html using notepad and a physical book (and my first websites were not great). Then, at a certain point, some very clever companies started offering basic engines. These were still more for early adopters, and one could build a steady side hustle making static sites for small businesses. But then Web2 evolved, and suddenly anyone could make a website using intuitive programs, or skip a website altogether and run a business strictly through social media.
The same cycle is currently happening with DeFi. Interestingly, it’s also happening with other technologies such as artificial intelligence and even 3D printing. Both have been around for some time, but both are waiting on that platform that takes away the many technical requirements, the ability to troubleshoot every step, and the risk that things don’t always work. They haven’t broken through this barrier, and neither has DeFi.
The Engine and Language
In the talk, Piers explains that he believes Radix has developed this “barrier breaker”, allowing the mainstream to finally take part in DeFi. After years of development, Radix has built what it calls the Radix Engine. By taking execution and assets, and combining it with consensus, the team claims to have taken all of the hard work, the low level (but time consuming) problems and have solved them. All below the surface. Users can interact with tokens, wallets, assets, and use cases, and the engine will give them the utility they need, in a secure and deployable format. Like the game engine, this opens the door to a much broader group of users who have a vision, have the use cases, and just need an intuitive and secure approach to make it happen.
However, the engine requires an intuitive language, and Radix has been working to make that a reality as well. Dubbed Scrypto, this part of the Radix stack is designed for the needs and use cases of Web3, and is built to act similarly to how JavaScript transformed Web1 into Web2, enabling 27 million developers to have the tools they needed to build up the internet we see today. Scrypto is set to do the same for DeFi, and Piers offers the user feedback to date as a testament to its effectiveness.
The Result
Radix has been training over a thousand developers how to program the Scrypto method on the Radix Engine, using asset oriented language in order to more easily code the use cases that Web3 customers will engage with. What was the result? Developers reported that it felt like “cheating to build Web3 using Scrypto.” This tool provides the shortest path from idea to implementation, and it shows. Other stats that show Scrypto (and the Radix Engine) and its effectiveness: in 12 months, over 4,500 developers were trained in the language. Some couldn’t believe how easy the process was, with the top comment stating that “As a Google software engineer, this has to be one of the best programming languages I’ve seen yet.”
Are we about to break through the Web3 barrier to mass adoption? It’s hard to tell, but this keynote provides a lot of hope, a solid track record, and the testimonials from developers to certainly lean that direction. We will be looking at what Radix does next, but it might just be the innovation we need to transition from a $200 Billion DeFi portfolio to the $400 Trillion market potential.