The recent crypto crash presents an opportunity for decentralized financial (DeFi) firms to rethink how this entire system works. And according to RAILGUN Chief Scientist Kieran Mesquita, this gives us a chance to rebuild it.
There are some steps crypto companies and projects can take now to create a more secure and stable future for decentralized finance (DeFi). Since crypto projects cannot exist without their investors, they must diversify their target audience, take responsibility for educating them, and go beyond moonshots.
If cryptocurrencies are to be considered real currency, they have to start behaving like a currency.
It is essential to have a wide variety of investors
Cryptocurrencies, like any other currency, are most successful when held by different holders in different institutions. Think about it. Everyone, everywhere, has some form of fiat note or coin in their possession. Regardless of socio-economic background. This is what crypto should strive for.
The best way to inject trustworthiness into crypto is to spread it as much as possible. Companies that have investments in DeFi are encouraged to choose security, to protect the interests of shareholders.
Hedge funds can take great risks because they have the financial scope to bet on different coins and tokens without any restrictions. Day traders add extra thickness and depth to the distribution, which can prevent currencies from swinging too quickly. When will we reach the stage where casual investors are everywhere?
To achieve this, industry leaders must design technology that is clear, easy to use, and most importantly, easily accessible. The current highly centralized distribution of cryptocurrencies betrays both its principles and its promises.
How can business leaders solve this problem? By identifying target investors (and users) the way well-run companies do.
Rather than courting whales, blockchain projects should focus on attracting and retaining a wide range of investors. For example, companies like E*TRADE and Charles Schwab know the popularity of crypto and provide guidelines for their investors. There is a growing potential for crypto projects to lure the same investors who entrust their long-term investments to these companies.
In the world of fiat money, nobody invests their entire pension; so why do many crypto projects assume that investors will do the same? The past few weeks have proven it wrong to portray crypto as a get-rich-quick scheme.
Market leaders must present their ideas as stable long-term projects. It is time to stop portraying crypto as a modern form of gambling and instead demonstrate its usefulness as a decentralized currency designed for the long term.
With this in mind, blockchain projects should clearly define their identity, their long-term goals, and what they hope to achieve.
At RAILGUN we have prioritized transparency on our website by showing our key team members, their individual references and links to professional pages. When potential investors look at our project, they know exactly who we are and what our skills are.
Let potential investors know your business model
The main difference between cryptocurrencies and fiats is the rapid change in value that digital currencies can experience.
This may sound spectacular to early investors, but the specific drive to find a coin or token that will “go to the moon” ultimately ruins the chance for these currencies to hold a functional value other than that of a effect.
If DeFi leaders are serious about driving widespread adoption and successful use of cryptocurrencies, they should be doing what every major movement does: investing in educating people at all levels.
Crypto projects should use their best asset: proximity communication, and use it to make themselves as transparent as possible. Listed companies are required to hold a shareholders’ meeting once a year; crypto projects should do the same monthly or even weekly and actively invite community members to ask questions to our development team in real time.
Crypto is based on the mantra “do your own research” (DYOR from English do your own research), but successful and reliable projects must be candid about the risks associated with using the protocol and the future of our developments.
Leaders in the crypto industry should help people do their own research by giving them as much information and access as possible, and as often as possible. We must end the era of blockchain projects gaining popularity with grandiose plans and vague roadmaps.
At RAILGUN we spend a lot of time and energy explaining our technology to our community and answering any questions. By prioritizing access, we are able to foster a culture of constant knowledge sharing.
This approach need not be radical; it just has to be consistent. We’ve ensured this consistency by hosting weekly DAO-wide Discord calls and posting to the Medium blog every two weeks.
Another way blockchain projects can educate a range of potential investors is by promoting the formalized study of blockchain technology, cryptography, and decentralized finance at the university level.
Students can clearly learn fiat currency economics in college. Now that cryptocurrencies are a real reality, leaders in our industry should focus on developing the fundamentals of blockchain technology and educating teachers in the field.
CoinDesk has already started compiling an annual ranking of the best universities for blockchain studies. There is currently pressure to advance the future of deep technology at European universities, such as University College London or Oxford, and the community is contributing to this trend.
For example, IOTA recently made a donation to Imperial College for: study distributed ledger technology, and other leading projects are participating in similar initiatives. These students might as well be future cryptologists, data scientists, and blockchain developers. Why couldn’t the crypto space welcome these new talents?
Don’t be afraid to look like a traditional finance company
The biggest problem crypto has to deal with is that many potential investors remain wary, especially those outside the tech scene. Who can blame them after this crash?
The crypto industry currently operates as a dysfunctional religious cult, with insider information being shared in closed channels where its followers are constantly addicted to flashy distractions.
YouTube personalities work as preachers and develop an audience that monetizes the cult of fame. The real job of educating the public about crypto has been entrusted to journalists and magazines who produce an endless stream of introductory crypto and blockchain discovery articles.
The future of crypto currently rests on the shoulders of journalists, who are tasked with writing masses of articles about “what is X” when everyone is best served by journalists who have the time and ways to investigate the “why” of these technologies. .
A crypto community
Ultimately, it is against the interests of crypto companies and blockchain projects to closely train “crypto bros” who already know the technology through Discord channels and complex, specialized technical platforms.
If decentralized finance is to become mainstream and replace fiat currency, there must be a large-scale shift to education with the same ubiquity and veracity as traditional fiat currency. The industry should look to more traditional financing to discover the multitude of education and access opportunities for the general population.
For example, crypto and blockchain projects can hold public and easily accessible workshops, as banks and fund managers do. There are newsletters and magazines from major trusts that target young investors, older investors or investors with families.
The Financial Industry Regulatory Authority (FINRA), a US non-profit organization, offers a program to teach investing. In the UK, Hargreaves Lansdown offers many free resources to help beginners understand portfolio building. These targeted outreach methods are tailored to specific demographic groups to provide financial education.
In our case, we’ve found that the best way to educate our community is to host weekly conversations explaining everything about our technology, smart contracts, and crypto.
The crypto industry can now change
The crypto sector has already experienced crashes and will experience more. However, future crises can be minimized if companies seize this opportunity to reassess their modus operandi. It may mean letting go of the mentality.”Go big or go home† [tout ou rien] to make more room for projects that pursue slow and steady growth.
Once the market picks up again, this opportunity for change will close and all DeFi players will once again start to keep their fingers crossed and pray that the blockchain will be beneficial for their investments. Crypto doesn’t have to work like that, and it’s time to embrace positive change based on what has served traditional currencies successfully.
About the author
Kieran Mesquita is the scientific leader of RAILGUN, the first decentralized smart contract project to provide privacy for cryptocurrencies that work seamlessly with DeFi.
He has extensive experience developing technologies for blockchain and DeFi projects. Kieran was an early adopter of BTC and one of the first people to develop its GPU mining software.
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