DeFi's Two Cultures

There are two cultures in the DeFi space. Not a perfectly clean divide, but as much of two cultures as you can have.

Let's call one side Left and one side Right.

On the Left side, we have heavyweight American protocols like Compound and Uniswap. The leaders of these protocols have Twitter profile photos of real people with real names. They're polite and articulate. They're from Wharton and Columbia and they live in NYC or SF. They're backed by a16z and USV. They're audited by Trail of Bits and never require more than one or two revisions. You get the idea.

On the Right side, we have international heavyweights like Aave, Yearn, Synthetix and Chainlink. Many of the Twitter personalities here are more likely to be anonymous. Their grammar often seems full of intentional mistakes. They have armies of green frog followers. They're scorned as "toxic anons".

The most aggressive conflict that I've seen between these two sides has been over Compound's oracle system. An oracle system provides price feeds to protocols, which are used for many things - particularly liquidations on lending protocols.

Compound uses Coinbase and Uniswap as its oracle feed (just as you might expect) and Aave uses Chainlink. The Chainlink community deployed its army of frogs to try to persuade Compound to use Chainlink, but this aggravated the Compound community, and harsh words were said (by the Left's standards). Joey Krug said he would all dump his COMP and remove all 0x from the protocol if Compound integrated Chainlink. Leshner said some biting things.

And then, one day, Coinbase's price feed massively mispriced DAI because of large specific activity on Coinbase. Many Compound users were liquidated because of this, and there was even a proposal to use Compound reserves to repay the victims (which didn't pass). Chainlink gloated. But still, no integration.

But over time, Chainlink has become a multibillion dollar protocol ($27bn fully diluted), and might be the foremost experts now on oracles indeed.

It looks like the Compound community is really considering an integration.

Kyle Samani once made the point in a tweet that the winner here (Right vs Left) could come down to how the US decides to regulate crypto. Purchasing an index like DPI will give exposure to both without bias.

Another related, controversial element is around "fair launches" (e.g. the Yearn launch) vs VC capital (e.g. Uniswap's traditional VC rounds). There have been many subtweets between the two sides around what is appropriate for crypto and what is healthier for development. It'll be interesting to see how this evolves, and where funds like Polychain are perceived (e.g. Polychain made a big investment in Yearn after their launch, as opposed to having participated in a closed seed round).

The point is that, crypto might be open, permissionless infrastructure where code is perceived as law, but there's still many cultural biases involved. These create all kinds of effects around perception of trust. The mutual cooperation of these two cultures and the safe integration of protocols would be ideal, but might also be difficult for these reasons.

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