The products a company creates define the type of impact it wants to have on the world. What separated the truly great, innovative companies is a strong sense for who they are and why they are building.
Previously, we haven’t really had a cohesive statement to define who we are. The closest we have gotten is reasoning by analogy and dubbing ourselves as the “crypto BlackRock.” But that’s reductive to who we are. What would be the point of forking the existing financial ecosystem if all we are going to do is build the same institutions that existed before?
We create assets that make finance accessible.
We understand that finance fundamentally describes the way by which we work together to achieve things as a society. Having the privilege to participate in financial markets means that we get to help guide where society allocates resources and thus benefit from the general wealth creation. That’s what makes accessibility so critical.
We chose to tackle accessibility from the fundamental financial layer because that allows us to make a bigger dent in the financial ecosystem. By only creating pretty UIs, we would continue to remain beholden to technology that others build and miss the true power the openness and composability of DeFi provides.
What’s so beautiful about the index fund revolution was that it disintermediated rent-seekers that would often charge high fees and capitalized on the ignorance of the customers they were supposed to serve. It was a huge leap forward in allowing the individual investor greater control over their own financial destiny.
Where Vanguard, BlackRock, and State Street went wrong was that they stopped innovating and they started actively hampering progress. They used their large governance power across industries to side with short-term CEOs and board members. They discouraged competition between any competing companies that they owned and that is not something we will ever stand for.
Yet another roadblock for these titans of the old world was the scope of things they could even build. It took decades for the first Bond ETFs to ever come to market due to onerous regulations, OTC desks and issuers clutching to their power, and the cost of building the underlying infrastructure. With DeFi, what took them decades would take us only a few weeks.
Not only that, the types of markets we can provide access to has absolutely exploded in scope. As an example, traditional banks typically have market making desks that profit from volatility when their lending businesses are doing poorly due to a bear market. They are able to remain well hedged, but it’s so much harder for an individual to do so. In TradFi, there is no way a market making firm would ever accept capital a single mother would be able to offer. Yet with DeFi, AMMs provide the same opportunity no matter who is providing the liquidity allowing people access to a financial opportunity that was unavailable before.
DeFi broadens the design scope by such an insane amount and gives us the opportunity to build products that have never been considered before. If we get stuck too much on sector indices, we’ll miss the larger opportunity coming with this financial revolution. It’s important to consider deeply the opportunities DeFi protocols are making possible and how we can make them accessible.
There are three main ways we can go through the product exploration process:
- Build For Ourselves: When we make products we ourselves would use, it makes it really easy to get the design right and we know that there is at least some market there (individuals like us). However, it’s easy to convince yourself that you would use the product, but when you are actually faced with it you wouldn’t so it’s important to be mindful of that bias.
- Identify Opportunities: Because all the data on-chain is publicly available, we can see who is using DeFi and for what reason. From that data, we can think about ways to make their experience way better. This also bakes in market research into the product discovery process.
- Listen to Others: Many of us are embedded in other communities within DeFi. It is always valuable to gain insights on what problems other people are facing. As simple as keeping an eye on a Discord channel. Pulling on these threads can often reveal massive opportunities.
Once we have insight as to a potential problem, there are a few attributes of a good solution we want to keep in mind:
- Reducing risk.
- Reducing operational overhead.
- Reducing costs.
If we can identify a problem and construct a solution that matches those attributes, we’ll know we have a real winner on our hands. The Set team is here to support and provide engineering feedback and implementation details.
As an example, I recently went through the process of exploring what an AMM product would look like. I Identified the opportunity by noticing how much un-incentivized TVL was locked in AMMs. It was massive! You can read about how I approached the initial framing here. I also considered how the product may evolve in the future as the DeFi landscape matures and we have more options for composability. [There is still a lot of work to do on this product, but if any of you find it interesting, please reach out].
I’m really excited to explore this design space with all of you and see what awesome products we can come up with. By the end of the year, we should aim to have 10 great products (DPI being 1) that each have at least $100M+ in TVL. In building these products, we honor the great innovators of financial markets like Bogle, Fibonacci, Scholes, Grant, and hope to provide the same level of value for the world.
We consider deeply the eventual end users: a middle aged factory worker saving for retirement, a father investing in a college fund, and the young woman daring to make a bet against the status quo. If we do our jobs right, we will greatly accelerate the pace at which DeFi is adopted and make a dent in the financial future of our world.
Do you mean like the downside of being liquidated?
I mean that reduces the risk of liquidation. I need to get my terms right when pumping our products 