Başak | Web3 UX

Vitalik just laid out some core principles, but lets dig into the reason why EVERY principle named here matters by reminding ourselves of how real people have been hurt when these principles are missing, and real people are being helped where they exist. Let´s walk through them: ¨Minimizing centralized chokepoints and trusted third parties¨ FTX is the clearest example. Billions in customer funds, were routed through a single trusted entity and then misappropriated without oversight. People trusted a brand name and the brand name, one that made it to the Superbowl, Hollywood, and even the White House, betrayed them. Low Risk DeFi Protocols should operate differently where collateral is locked onchain, liquidation rules are automatic and no single person can move funds at their discretion. The protocol should not ask you to trust anyone but the code, we must keep it this way, front ends included. The temptation to centralize parts of this for efficiency gains is one we should try to avoid. ¨Permissionless access¨ In 2022, the Central Bank of Nigeria restricted citizens from sending more than $20 per week through mobile banking. Overnight, millions of people lost the ability to move their own money. Meanwhile, anyone with an internet connection can deposit into DeFi protocols today with no application or approval and no government deciding your weekly limit. A farmer in rural Nigeria and a portfolio manager in London have the same door, a door that never closes. This is a birthright for crypto, and DeFi should continue being a global force for all. ¨Maximizing control over your own assets¨ In 2013, Cypriot banks froze accounts overnight and took up to 47.5% of deposits above €100,000 to bail themselves out. People woke up and discovered their savings had been confiscated. They had no say or warning. In DeFi, your assets sit in a wallet only you control. No bank board can vote to take a percentage of your balance. Self custody means the rules don't change while you sleep. As things advance, there are pros and cons to self custody, we must heed these and develop better systems to ensure the security of both assets, and the people holding them. Security first In 2016, Bangladesh Bank lost $81 million when hackers exploited the SWIFT messaging system. The world's most trusted interbank network was compromised. DeFi has had its own painful lessons. But the trajectory matters. Many top teams have now operated for nearly six years across brutal market conditions without a loss of user funds. Security in DeFi is a practice and it compounds over time. Reducing centralized chokepoints as mentioned above, can increase security too! Privacy Every time you swipe a card, your bank knows what you bought, where you were, and when. That data gets packaged and sold. You never consented. You probably never knew. The same is true for blockchains today. Vitalik is right that privacy in DeFi is still early. But the direction matters, momentum across efforts in IPTFT, the EFs PSE, Kohaku, and L2s are promising. The goal is to create a system where you can participate fully without surrendering your data as the price of entry. This is the next leg up in having DeFi be used at scale, safely, in the real world. The walkaway test When the founder of QuadrigaCX died in 2019 (or claimed to), $190 million in customer crypto vanished with him. The entire exchange depended on one person holding the keys. One person. A protocol that passes the walkaway test keeps running even if every member of its founding team disappears tomorrow. Ethereum itself is the best example. No single person can shut it down. The strongest financial infrastructure is infrastructure that doesn't need its creators to survive. Oracle security and decentralization In 2023, a price oracle manipulation on Mango Markets led to over $100 million being drained. The attacker didn't hack the protocol's logic. They fed it bad information, and the protocol trusted that information blindly. Vitalik calls this a skeleton in the closet and he's right. Oracles are the bridges between the real world and onchain systems. If that bridge can be corrupted, nothing downstream is safe. Chainlink and other decentralized oracle networks are building toward resilience here, but this remains one of DeFi's most critical frontiers. We cannot rest on our laurels here and continuous innovation is a necessity. Democratizing risk management and wealth building For most of human history, sophisticated financial tools belonged to the wealthy. Hedging, portfolio diversification, yield optimization etc, were services you could only access with a private banker and a six figure minimum. DeFi protocols today offer these tools to anyone. A student in Lagos can access the same yield curves that a hedge fund in Connecticut uses. Not a watered down version, the same one, this is absolutely beaitiful because it offers a structural shift in who gets to build wealth. One of the biggest prides of crypto is all the regular people it helped, the Cobie´s and the GCRs of the world would not exist if tools were not democratized, they must continue to be.