Disclosure: The opinions and perspectives presented in this article are those of the author alone and do not reflect the views or opinions of the editorial team at crypto.news.
The DeFi space boasts an abundance of infrastructure but lacks sufficient applications—at least that’s the prevailing sentiment echoed in the crypto community. This year alone, venture capital and private equity firms have invested hundreds of millions into crypto initiatives prioritizing infrastructure, often as their sole focus.
The figures tell a compelling tale. In the first quarter alone, VC powerhouse a16z allocated $100 million to Eigen Layer, a restaking protocol serving as an infrastructure layer for the Ethereum network. Simultaneously, private equity firms Bridgewater Capital and Deus X Capital partnered to support a $250 million infrastructure platform, while RW3 Ventures raised $60 million specifically for a fund centered on blockchain infrastructure and DeFi. These headlines represent just a small fraction of the numerous announcements; a quick scan of any crypto news outlet reveals a wealth of similar stories.
Infrastructure Focus
The intense focus on infrastructure sparked significant discussions during and after the Ethereum Community Conferences, or EthCC’24, held in mid-July. Many attendees reached a common conclusion: There is a pressing need for more applications and less focus on infrastructure.
This viewpoint is certainly understandable. To illustrate the issue metaphorically, an excessive emphasis on infrastructure resembles constructing the most incredible theme park imaginable—yet lacking any rides. Who cares if the park features beautiful pathways, stylish gift shops, and well-stocked food stalls? If there are no thrilling rides, visitors won’t come, much less pay for the experience.
Hypothetical value and promise can only drive customer adoption up to a point. A diverse array of applications would likely engage and retain DeFi users. With more options available, users would have greater incentives and opportunities to both onboard and explore.
The challenge? Simply increasing the number of applications can only address the core issue (i.e., the long-term growth and sustainability of the DeFi ecosystem) to a limited extent. Returning to our analogy, a quality theme park requires various rides to entice guests; however, if those rides are hard to access or unpleasant, visitor interest will quickly decline.
The Core Issue: User Experience
This brings us to the real challenge at the center of the apps versus infrastructure debate: the user experience.
To say that the DeFi ecosystem (and the emerging BTCFi sector in particular) is unintuitive for average users would be a near comical understatement. Even seemingly straightforward actions, such as transferring assets between dapps across different ecosystems, can become an arduous and frustrating task for everyday users. Bridging and swapping are crucial for cross-chain transactions, yet these processes can be nearly impossible for those new to crypto without expert guidance. It’s not difficult to understand why a novice might abandon the process mid-way—or hesitate to attempt it in the first place.
Infrastructure is designed to facilitate seamless onboarding of users to dApps, yet the BTCfi ecosystem still struggles with fragmentation issues among various Bitcoin (BTC) variants. Despite advancements in interoperability, the user experience continues to be complicated. Traditional bridges and platforms possess considerable limitations and frustrations concerning scalability, slippage, MEV issues, TVL honeypots, and slow, costly transactions.
The “we need apps, not infrastructure” debate fundamentally misinterprets the importance of both dApp and infrastructure development by advocating for one over the other. The sheer quantity of infrastructure projects is irrelevant; what truly matters is their quality and effect.
It’s fair to say that few aim to create low-impact infrastructure projects. DeFi is distinguished by its innovative culture; many dApps represent first-of-their-kind solutions, prompting their creators to build the necessary infrastructure from scratch.
However, as with any race, not every participant can emerge victorious, and unfortunately, many infrastructure projects today may never make a significant impact. The era of developing projects solely for DeFi enthusiasts willing to invest time in learning dApp usage is rapidly fading. DeFi is moving towards its mainstream phase—and the casual users we aim to attract will not accept subpar user experiences or concern themselves with the underlying infrastructure. To use a relatable analogy: when booking an Uber ride, a user doesn’t care whether the platform operates on AWS or Google Cloud; they simply want to reach their destination efficiently.
Prioritizing Users
With this perspective in mind, our ultimate objective should be to build robust infrastructure while abstracting it away from users, allowing them to fully utilize their dApps without overthinking the underlying processes. Navigating the DeFi landscape—and each app within it—should be effortless and intuitive for users. At the very least, we must streamline interoperability by enabling fast, zero-slippage, MEV-resistant, secure swaps with consistently excellent user experiences. Furthermore, infra-abstraction must be a priority; users should never need to grapple with the mechanics of the system.
This is achievable, and intent-based architecture offers a framework for user-centered development in DeFi. Unlike traditional blockchain architecture, which often necessitates users to follow intricate steps to reach their goals, intent-based architecture seeks to prioritize users. With this methodology, users articulate their objectives (e.g., making a purchase in a BTCFi app using funds on Ethereum) and can rely on the blockchain protocol to autonomously execute the necessary technical steps to fulfill that directive. If adopted widely, intent-based models could substantially facilitate infrastructure abstraction while enhancing user experiences and simplifying architecture.
Of course, intent-based architecture isn’t a catch-all solution. Projects and protocols must work collaboratively to develop integrations that ensure smooth interoperability and remove operational complexities that could overwhelm users. Innovators will need to design with the casual user in mind, rather than targeting crypto natives with technical expertise.
It’s time to move past the infrastructure versus applications debate and focus on what truly matters: the users. Most users probably don’t concern themselves with architectural designs or the investment disparity between application and infrastructure projects, as long as security standards are upheld and functionality delivered. They desire blockchain-based finance to be straightforward and accessible; consumers need to use apps, conduct transactions, and discover new methods of utilizing and profiting from DeFi. As innovators and proponents of DeFi’s potential, we have a responsibility to (re)build the ecosystem into an inviting environment that even novice users can navigate without feeling confused, overloaded, or disheartened.
Let’s shift our focus from merely counting infrastructure projects to ensuring their true value.
