On Monday, a significant protocol was exploited for several million dollars. On Tuesday, a new, limited edition NFT collection of 8,888 frog avatars is released, jamming the entire network for two hours. On Wednesday, the prices of all major cryptocurrencies unexpectedly plunged 30% — the bear market is just around the corner, people are tearing their hair out. On Thursday, a new project is airdropping tokens to hundreds of thousands of users. Network congestion again. Friday is finally calm, just one launch of the new Ethereum killer (faster, better and stronger blockchain) and a couple of controversial news about more prominent members of the community. If nothing else, it will make for great meme material.
Without exaggerating too much, this is what the background of a working week in a web3 environment can look like.
Turbulence is an inevitable part of the crypto world, and the dynamics in the decentralized finance (DeFi) industry go one step further. So much that you will either openly despise everything that has to do with DeFi or be "hooked" on it and think it is the best thing in the world.
Then again, despite all that uncertainty on steroids, one often hears that DeFi represents the best use case of blockchain technology in the world today. Why is that and what is it like to work on that steep roller coaster? We will get the answer firsthand, from the employees of the Decenter company.
But first, let's go over the basics.
DeFi: who, what, where, when, how and why?
The crypto movement was born with the idea to solve the problems created by the traditional financial system (TradFi). However, it seems that only with the advent of Ethereum, and especially DeFi, can these stubborn problems be properly addressed.
TradFi significantly complicates people's daily lives. Banks operate non-transparently, and the services of these centralized entities are completely inaccessible to hundreds of millions of people. At the same time, they are also unfavorable due to numerous intermediary levels whose appetites need to be satisfied. Due to the bulkiness, the system is sluggish and inefficient, and the users themselves are forced to agree to the offered conditions because there is no alternative.
On the basis of decentralization, with maximum transparency, DeFi creates a more efficient, constantly accessible, favorable and fairer system, in which each person is the sole owner of their digital assets, eliminating the need for centralized structures as the basis of the system's functioning.
DeFi is based on open protocols and decentralized applications that everyone can access and, likewise, everyone has the right to develop. Agreements are enforced by smart contracts (code), transactions are executed in a secure and verifiable manner, and legitimate state changes are accessible and visible to everyone on the public blockchain.
In short, DeFi offers a more affordable alternative to every existing financial service - from simple money transfer, to exchange, loan, credit, savings, insurance, etc., on a global scale, accessible to anyone with an internet connection.
Fertile land for innovation
DeFi has brought with it a wave of innovation that has not been seen in other ecosystems so far. Almost daily, projects emerge (successful ones and less so), and what makes it possible for something like this to happen on a large scale is the very nature of DeFi, which is an interoperable system with easily integrated elements.
This allows developers to give more creative expression to the services they create. Above all, developers don't have to waste time "discovering the hole in the pot", but rely on the foundations that others have already built, and focus on the things that make their products special.
Lego bricks and the endless possibility of assembling them is the most vivid and probably the most accurate description of how the DeFi system works.
And what does it look like to play with Lego blocks?
"It will certainly sound like a cliché, but DeFi implies an extremely dynamic environment where new protocols appear on a weekly (and even daily) level in an attempt to offer new financial services to users who value decentralization, ownership of personal funds and transparency" - Nikola Marković tells us , Market Research in Decenter.
In addition to protocols that are market leaders in the field of exchanges - DEXs and lending protocols such as Maker, Compound, Aave, Uniswap, Curve, etc., there are also protocols that aim to improve existing mechanisms. Unfortunately, there are also malicious protocols with the ultimate goal of extracting money through the creation of notorious Ponzi schemes - adds Nikola, citing as an example that the wave of 'DeFi 2.0' protocols wanted to fill niches that previously popular protocols did not capture. Some of them experienced some adoption, considering that everything took place in the middle of the bull run. However, they all proved to be unsustainable solutions as soon as the bear market started.
Innovations, on the other hand, come from the technology itself (e.g. Flashloans), the architecture of smart contracts, as well as from various economic mechanisms (tokenomics), mathematics (AMMs), etc.
"My mindset coming into the space was, 'Ok, that sounds interesting, why don't I try it; I am interested in decentralization, blockchain as the underlying technology of DeFi, finance...'"- points out Nikola.
F"rom the point of view of working in DeFi, I think that, both for dev and non-dev positions, it can be very challenging to work and make a legit product on a relatively new technology - he adds, stating that marketing in web3 has not yet found his 'golden rules' - dev tooling solutions are only slightly younger than the technology itself, the security aspect has gained a completely new dimension, etc..." - Nikola also states.
A question of regulation
A lot of non-DeFi people are skeptical about the legitimacy of the whole space, including some developers. This is somewhat understandable because decentralized finance is still waiting for a period of extensive regulation, and years of work on improving protocol security, user experience, etc.
The good thing is the fact that there is still a lot of room for progress in DeFi and even in the spheres that I call pillars of financial systems (DEXs - Automated Market Makers and lending), and that it is possible to build different products on top of existing DeFi protocols that have proven their resistance and sustainability - points out Nikola.
What kind of people does DeFi attract?
DeFi is open equally to everyone, whether they create in it or are its users. However, it is clear that not everyone will do equally well, especially as creators.
What is bleeding-edge technology today may be obsolete in the DeFi world tomorrow. Adaptability, hacker mindset, critical thinking, precision and obsession with acquiring new knowledge are the basis without which there is no survival in this challenging but endlessly interesting world.
Since DeFi is a very young industry, almost every day a new protocol appears that is interesting and needs to be researched and understood - Nenad Palinkašević, Project Owner at Decenter, tells us.
Or what is even more important - he adds - new protocol hacks often appear, some of them extremely dangerous, so we need to study them so they don't happen to us. That is why a significant and mandatory part of this job is daily learning new things, reading the codes of the DeFi protocol that we integrate and communicating with the people who wrote them.
The second part of the job is deep work where we actually write the Solidity code that interacts with those protocols. Writing smart contracts is a highly responsible job because the code that is released must be correct; even the smallest mistake can do a lot of damage. So not much is typed, but everything that develops is critical. That is why it is necessary to establish processes of testing and reviewing the code before putting it into production.
Learning on an everyday level
According to Nenad, every day is an opportunity to learn something new, from complicated cryptographic zero-knowledge proofs to assembly-level code writing for optimizations.
To some, this certainly sounds unattractive and scary, but for true geeks it is constant fun - assures Nenad.
For Nikola Janković, Content & Community at Decenter, DeFi is the craziest ecosystem he has ever worked in. That dynamism, he says, is downright addictive, and while there are days when the nonstop, work-and-live 24/7 nature of crypto gets tiring, he can't imagine himself anywhere else anytime soon.
Working in web3 and DeFi is mostly reminiscent of working in a teenage gaming community, because it is full of internal memes and sayings that everyone adopts over time. It is also full of chaos, creative and directed. Although there are many teams working on competing projects, they all have a common goal — to create diverse decentralized systems that improve the functioning of humanity.
As Nikola describes, during an average working day you can expect to find yourself in about twenty chats on Discord and Telegram, with attempts to focus for a few hours on writing or creating something significant, while on Twitter and Discord you follow current events and hope to come up with good meme.
Problems are the biggest challenge for developers
Considering that the ecosystem is not yet mature, DeFi has no shortage of flaws, and there are plenty of problems to solve. The constant threat of hacker attacks, scalability, access to external data, the need for users to be solidly technologically and financially literate are part of the challenges that could be written in a new blog text.
Overcoming these serious obstacles is certainly necessary for the mass adoption of DeFi and the improvement of the current financial system.
However, as it has always been - innovation and knowledge, but above all passion and enthusiasm drive things forward, and DeFi is no different. If you share such values, you have the opportunity to join a team that is seriously pushing the boundaries of DeFi. Check Decenter's profile on the Joberty platform and check the currently open positions they offer.