It’s no secret that DeFi is becoming an important component for a smart contract platform to have, opening up the network to new assets and existing ones to move between it. My favorite analogy that best represents this ‘big picture’ view was from
Daniel Masters, a little while back.
Over time what’s going to become transparent is that these networks are going to perform a utility function for transport, a transport for all kinds of digitized assets. Those assets could be monetary, hard assets, real estate, securities, identity, and more. These networks will transport that. So, there’s this interplay between the network itself, the protocol coin, and the type of assets that move on that network.
So, if you put all of that together you’ve got an environment going forward where I believe you could look at these networks and say they are like the railroads of the 1900s. They are building transport across the internet and across the world in a similar way the railroads did. It’s a utility play and in that universe of utilities, you’ve got many contenders but its hard to find one that has this combination of sensible governance, good people and founders, a well-funded and managed foundation, and a very feature rich blockchain technology. So, when you add all of this up it becomes to me, one of the great utilities in this crypto universe.
The growth we’ve witnessed in DeFi on Ethereum throughout 2020 and present day, is beginning to paint that image clearer. That being said, I find it’s not explained enough in how we get from these building blocks that we’re currently witnessing being built on Tezos - to higher level DeFi applications such as lending platforms. I believe it’s worth painting some more light on that particular subject.