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DeFi tools and mechanisms
"Your funds are under your control, 24/7"
Author: Ksenia Smirnova
May 24

Background

I have been in crypto since 2017, by training I am an information security specialist. I heard about the use case of blockchain and Bitcoin when I was still working at a factory. I must say, this happened quite late, and it’s unclear how I completely missed this topic and didn’t hear anything about it for 9 whole years. Somewhere at the end of 2017, I started running a channel in an attempt to figure out what was going on here. This led me to a position in a project, a startup, which is now part of a larger ecosystem of products.
It turns out that I now have experience in marketing work, training work, and experience working as a business developer. In general, every year something new is sure to come across. But in the market, you can probably still say that the topic decentralized finance is the area I am most focused on. I also recorded one, let’s say, season of videos about different DeFi projects. It’s called “Getting DeFi Ready.” This was in 2020-2021, and now my YouTube channel is no longer active. There just isn't enough time to do this right now.
You can watch old videos, they are probably now outdated to some extent, but as a basis for understanding how the same landing pages and dexes work, they are still suitable.

DeCommas

At DeCommas, I have a wide range of responsibilities: this includes teaching blockchain and DeFi, and business development.
DeCommas has a very good product called DeCommas API. This is, in essence, a layer of blockchain data that is provided in a form convenient for web3 developers if you want to build a portfolio tracker. For example, one of our clients is CoinStats. They have one and a half million people a month who come to look at the portfolio application, and we supply them with this data. There are several more clients, CryptoRank is a scoring service. So if you want a cheap and fast date, you can go look at build.decommas.io.
Regarding staff training at DeCommas: at the moment, a total of about one hundred hours of video and materials have been recorded for the DeCommas development team. There are two different levels: basic and advanced. This is not even training, but rather a discussion of some pressing problems in crypt. And right now we have started such a basic DeFi course for the Customer Experience team. Let's see how this turns out. Maybe we’ll also record an advanced DeFi course for a deeper dive for everyone.
Regarding services. DeCommas is a product that collects all blockchain data, that is, it has its own infrastructure, nodes in various networks, several circuits for security, for speed of operation, its own algorithms for storing and distributing data. We are currently working on new algorithms. It's a very competitive market and it's very difficult to reach customers there, so now the team is thinking about what they can build on top of it. There are different ideas for this: a trading terminal is currently being built, there are some attempts to log into the Telegram application for trading or tracking assets. But the main service is providing blockchain data in a convenient form for those who need it.
And the parent company is 3Commas. There, the main focus is on the automation of trading, and custodial and custodial trading. You take your API key from the exchange, connect it to the terminal, and you get one single platform for trading, that is, you can connect all exchanges in one place and have access to automation , that is, there are grids, DCA bots, plus some advanced trading tools that are not on the exchange. You can simultaneously set several stop losses and take profits simply in one button - everything is automated in one interface.

What DeFi is

DeFi allows you to use tools that are basically taken from traditional finance, traditional markets, only these tools are implemented using smart contracts in distributed networks, in networks built on distributed registry technology. But, since DeFi is evolving, like all crypto, DeFi is evolving along with the evolution of crypto. And now these financial instruments do not necessarily have to be strictly based on smart contracts. They can be hybrid: centralized and decentralized in nature, and, nevertheless, relate to decentralized tools. Now a lot of hybrid exchanges for futures trading have appeared, for example. And, in general, everything evolves.
But the main thing that is worth noting, probably, is the theses that are laid down in DeFi - these are transparency, uncensorability, modularity, embeddability, where one protocol can be built into another, into a third, and so on. Many of these theses are controversial. But, nevertheless, it is clear that the sector, despite all the problems,
which it contains, develops and grows. The first DeFi application, I believe, can be called P2P trading in Bitcoin, and the word DeFi itself appeared in specialized chats where several founders of different DeFi protocols of the first wave were sitting. This was in 2019. That is, the term appeared much later than DeFi itself.
Why is everything needed? It is officially stated that we must state be more free to manage your finances, use those tools in which banks and governments limit us, as well as sanctions, for example.

DeFi Tools

Most of the mechanisms are similar to those found in traditional finance. If you take the whole of DeFi, it can be decomposed into exactly three basic operations.The first is issuing loans. The second is a decentralized exchange of assets one for another. And the third is the creation of derivative instruments, that is, some assets, which reflect other assets from the real world or from the world of cryptocurrencies, it doesn’t matter. These could be stablecoins or liquid staking assets. It doesn’t matter, in general, it’s just the release of a derivative according to the algorithm that is embedded in the smart contract. The fourth thing adjacent to the side is what is above them, what helps one way or another from all these three basic operations to maximize income, that is, all sorts of automation, what is called yield farming, its automation to maximize income.
Their differences, first of all, are that your funds are under your control. You can withdraw them 24/7, if, accordingly, this is not limited by the rules of the contract protocol. Crypto loans work a little differently. The systems are built largely on the fact that you cannot borrow more than you pledge as collateral. That is, in the mortgage we leave the apartment as collateral to the bank, and in the DeFi protocol we must leave the crypto, and so much crypto so that the resulting debt from your loan does not bend the system, that is, there is no so-called unsecured debt. And this is probably the basic difference.

“Funds under control”

There is this purely crypto answer that we go through life with, and there is reality, and they are largely at odds.
When a simple man in the street asks, why are you sitting there in this DeFi of yours? Should I carry the money or not? We answer that, look, you are carrying money to the bank, and inside the bank there is a black box. It is not clear whether this money will be returned or not, if the bank goes bankrupt, it will not go bankrupt. What if suddenly sanctions happen to the bank? I have a great example. There was some kind of banking reform in Cyprus. At the same time, everything collapsed there, and many investors still have not had their deposits returned. DeFi is designed to solve all these problems. That is, you keep the funds in your non-credit wallet, only you store the private key with which you sign all transactions. You are completely responsible for these funds and only you manage them. This is such an ideal picture of the world. But in practice there are many “buts” and limitations, pitfalls associated with how the world of cryptocurrency as a whole works, how networks work, and what kind of narratives generally drive this market. As if we were also saying that in DeFi the profitability is higher, although during the last downtrend, let’s say, until the end of 2023, it was obvious that the interest on a bank deposit was higher than, say, on a deposit in Aave.

How to calculate the profitability of a DeFi protocol

The numbers in the protocol may be the same, but in fact, the probability of an airdrop and various risks inherent in the mechanism of the protocol itself are also taken into account. On dexes, when we transfer assets to the liquidity pool, there are mechanisms on which, in fact, the dollar expression of your position depends on the price movement. If anyone knows about permanent loss, I think they will understand what I’m talking about. That is, there are a lot of complex things and concepts that need to be taken into account.
Landing, that is, crypto loans, is the simplest and most understandable mechanism. Everything there is very similar to banks. In other stories there are many different factors and aspects by which we calculate profitability. How do we calculate it, how do we take it into account? There are a lot of factors, again.

Differences between protocols

Some are trying to improve existing protocols, others are directly copying them. The first known versions are AVA, Uniswap and so on. They differ for the most part only in the assets that they offer to their clients, as well as in the options for placement and profitability. In basic functionality they are all very similar. The only question is what interests you in this market. For example, you might be interested in Binance Coin (BNB). You go to the Binance network, work with DeFi there. It is clear that for a retail user who came with 100 dollars, this will be very unprofitable (taking into account the commissions on the network, you can leave 30-50 dollars as a commission for a transaction in different protocols). Therefore, there are protocols on Layer 2, on networks that are built on Ethereum, and there are fewer commissions, and working with them is more pleasant. Or maybe you are a fan of Solana or Ton coin, then you will work with these ecosystems. Therefore, the only difference here is what is more interesting to you in this regard.

Difficulties of working with DeFi

DeFi is not user friendly. Now, of course, it’s better than 3 years ago, but it’s still quite difficult, in my opinion. And, indeed, some kind of training, YouTube videos, allow you to save time and understand what is happening in general. Let's start with slang, it really differs from traditional banking.

Liquidity pools

This is a very cool thing. When DeFi began, one way or another, it was what is called peer-to-peer, like any blockchain system in general, that is, crypto lending, token exchange – they existed on this basis: one came, brought something , and the second one came and took something. That is, conditionally, if this is a lending market, then it would look like this: 10 people come, each with their own asset and their own quantity, and on the other side another 10 people should come, and it is desirable that both quantity, asset, and their desire coincided, and the percentage the rate at which they will, accordingly, borrow these assets from each other.
Or, let's say you need to place an order on the exchange. You place it and wait for someone on the other side to pick it up. But sometimes you come, see an order in the blockchain, want to pick it up, but it has already been taken before you (since Ethereum works slowly, you won’t see it right away, but only when the block arrives). And your transaction, accordingly, will come with an error, the order will not be executed, but you will have already spent the commission. It is very uncomfortable. Firstly, because this liquidity, that is, the number of assets that users brought, is quite fragmented.And secondly, we still need to find matches. An example from the ordinary world: on Wildberries, for example, or Avito there are millions of advertisements, and millions of users are looking for them. Among millions, it is quite easy to find two people who have the same interests. But when we talk about crypto and DeFi, about peer-to-peer systems, we are talking about tens of thousands, among which it is much more difficult to find a match than among millions. Therefore, such a system did not work very profitably.
What did we come up with? Let's take all the assets that users brought. For example, Kolya brought 10 bitcoins, and Vasya and Petya brought 3 ether each. Kolya will throw off 10 bitcoins, and Vasya and Petya will throw off 3 ether. On the other hand, someone will come and take what he needs from this basket, and when he returns it, he will pay the commission in proportion. More precisely, he will pay this basket in full in proportion to who brought how much to this basket, respectively. That is, it turns out to be a little box into which you can throw anything you want. Whoever needs it will take it from there, or put something in return, if we are talking about exchanging an asset. If we are talking about a loan, he will simply take it, leave something as collateral in return, and go about his business. This is much more convenient – we are not obliged to torment two specific people, we simply from each according to his abilities, to each according to his needs, as they say, and everyone will be happy. Actually, this common basket of assets is called the liquidity pool. As soon as at the end of 2019 and the beginning of 2020, all decentralized exchangers and lending protocols switched to the pool system, and everything was ruined. Something like that.
How can you ensure you have been paid a fair commission? You take the contract code, read it, figure out what is written there and verify whether everything really works as it is written. But I don't think anyone is really doing this or questions the smart contract.

How DEXes work

There are a lot of nuances. If we take centralized exchanges, we see that they are built on the order book or price glass model, where there are these notorious bids, asks, makers and takers. Makers, accordingly, push taker orders into the glass. They tried to decentralize this, but it didn’t fit very well with the way the blockchain was structured then, so they also switched to a liquidity pool scheme, where you simply put two assets in a pool and you can exchange them with each other. Moreover, you can create as many pools as you want, any assets you want, then they came up with the idea that you can add a bunch of assets to the pool, you just need to understand how to calculate the price. To do this, we simply set up a formula for how this particular pool will calculate the price of two assets relative to each other, depending on their quantity. They exchange these assets among themselves, and if you need to exchange two assets that do not have a common pool, then the protocol offers a certain route on how to do this from one pool, respectively, to another, through an intermediary pool. And overall everything worked out well.
With the development of technology, since various fun things have appeared, for example, fast blockchains such as Solana, or, for example, hybrid blockchains that can be launched in one click, thanks to modular technologies, thanks to the fact that smart developers have come up with all sorts of SDKs in order to to launch our own blockchain, we came up with the idea of simply building such blockchains on one node. That is, they came up with a blockchain, I say conventionally, on one node, let there be 10 nodes, and exactly one application runs on this blockchain. An exchange application that allows you to trade exactly the same price order book as on a centralized one, one-on-one, you can’t tell the difference. Only if on a centralized exchange you need to create an account via email and go through KYC, then here you just need to connect your wallet and trade assets from your wallet, and, accordingly, no KYC, which one you no longer need to go through.
There are two main types of decentralized exchanges. The first type – they still work on the liquidity pool model - help exchange one asset for another. This is still more of a spot exchange, that is, of net assets. The second type is hybrid models that create their own blockchain for a trading engine like dYdX, and they, accordingly, work closer to CEX: according to the order model.

AMM

Automated market makers. What the Automated Market Maker acronym is actually saying is that guys, this protocol has a liquidity pool, and the price in this liquidity pool of one asset relative to another is determined by using some kind of mathematical formula. The most basic formula is x=y*k. Accordingly, x and y are the number of assets in the pool, and k is a constant. It's just a formula. There are different formulas. Actually, AMM tells us that that pricing in the liquidity pool occurs according to some mathematical formula. That's all. That is, an automatic market maker is a market maker who determines its own price according to the algorithm embedded in it. And liquidity can be provided by anyone and we don’t need any centralized market maker, like Alameda used to be there or now Wintermute. This is what this means scary abbreviation AMM.

Will centralized exchanges disappear?

I would like to believe in this bright future, but it seems to me that the future lies with hybrid models. Where you don’t have to go through KYC, where you still control the funds yourself, there is no censorship. I hope that everything is moving in that direction; this is indirectly indicated by the increase in trading volumes on dexes and their percentages relative to the volumes traded on centralized exchanges. But this is still a long way off. I hope, that we will switch to some kind of hybrid models that will combine different approaches and give more freedom.

How to ease the transition of users from traditional finance to DeFi

In any case, some basic knowledge is needed. It is clear that in Tinkoff Investments you can immediately deposit something and buy shares, bonds, without even understanding what you bought and why. But some basic knowledge is still needed, one way or another. It’s just that if you buy something based on the principle: I’ll get rich here, it doesn’t work that way.
Firstly, interaction with DeFi will really have to be simplified. A few days ago, Vitalik proposed new improvements for ether: combining accounts with smart contracts to improve the user experience. Progress in this direction is visible. Now they are trying to work with different options, one way or another. Secondly, it would also be very cool to educate and fill the space with quality information, including making entry into the community simple. Crypt is quite toxic for beginners, a complex, not very tolerant environment. The generation of people who are now 20-25 and younger are entering very easily, unlike my generation, who are already over 35. And in this regard, it is easier for them. Thirdly, good, healthy regulation of this space would be helpful. There is some progress in this regard, but not everywhere. Everything very much depends on laundering algorithms.
That is, the issues of regulation, training and simplification of interaction – these are the main ones, in my opinion, so that it becomes good for everyone, simple and easy to come and work with these tools.

About regulation: why is it so difficult

On the one hand, it is clear that there are really important issues that are related to really bad things: money laundering, terrorism. The problem is that it exists on a much larger scale in the fiat world, but in our country they always like to point out that there was a terrorist attack, and the terrorists were financed, among other things, with the help of cryptocurrency. And when you start to take away, it turns out that Bitcoin, conditionally, contained only 0.5% of the total amount that the terrorists received. But, indeed, these points exist, and they need to be taken into account. And this is also in the interests of the safety of people and the state. But there is no need to go too far here.
The second question lies within the framework of what is a technology and what is a tool. This problem has long existed in distributed networks with the advent of torrents. Torrent is a neutral technology in itself – it provides file sharing. And it’s exactly the same in crypt. We can provide different technologies. For example, we want to maintain our privacy. Let's say I own millions of dollars and I don't want anyone to know about it, but I need to transfer them somehow, and I'll use private technology. But I understand that the same terrorists can use this same technology. And how to separate technology and human behavior? So far this is not interpreted in favor of krypton. Take the same case with Tornado Cash.
And thirdly, many people see this as hacks, constant deceptions, fraud – a very common thing in crypt. And in this regard, it is clear that the regulator conservatively sees a lot of financial risks here. Therefore, everything is very complicated and ambiguous in this system. I understand this side, but I admit that more freedom is needed here, and it seems to me that if all this really was created exclusively for bad, terrible things, then in general humanity globally would have been dead a long time ago.

Are tokens recognized as securities?

That's a good question. There are a lot of criteria for this Howey security test. And, indeed, there are prerequisites for the fact that many tokens in one way or another accrue some kind of profitability, thereby being pure security, and so on. And many have already made it onto SEC rosters. But let's just say there are many technical ways. For example, like in Curve. The Curve token itself is not a security. He just lives on his own. But if you stake it, you are given a veCurve token. But veCurve is already a security; income is poured into it. But the trick with veCurve is that it cannot be moved from your wallet and cannot be traded – that’s how the contract is made. That is, it is a security that is non-movable and non-tradable until you send it back to unstake the veCurve token. So they bypass this mechanism with a security. So there are different mechanisms to avoid this, but in general, if your team is private, has filed something, issued some kind of token and works with it, I don’t think the SEC will get to the bottom of it.

Account abstraction is one of the ways to make it all easier

Yes that's right. This is an attempt to provide the functionality and capabilities that smart contracts have to ordinary users. This, let’s say, is simply a way to create, control and manage accounts that have advanced functionality relative to your regular wallet account. That is, this technology allows you to pay commissions in any token, set some limited permissions in accordance with the logic that you put into it.
For example, in the trading terminal, which is being developed under the DeCommas solution, there is functionality that allows you to limit the set of exchanges, the set of pairs or the trading volume that a user with this smart account, the so-called smart account, can perform during the day. And this is part of it all. That is, you don’t have to bother with complex cryptographic narratives, SEED phrases, private keys, signing transactions, and so on. In general, this is much easier to work with from the point of view of retail, which has not yet arrived. As a person who has been in crypto for a long time, I think that the majority work with ordinary accounts, which are called externally owned, EOA accounts.

How to explain to people that it is safe?

This is a good question to which I do not have a clear answer. It’s really difficult to explain this, because this abstraction contains a lot of technical, really incomprehensible terms, but in short, again, for the most part, all this is tied to some kind of verification tool, access to these assets that belong only to you one way or another. That is, you do not have to own a SEED phrase, it is enough to have an email and access to it in order to be verified. Nowadays they work quite a lot with Passkey: they create a special key for linking to an application, for creating an account, and in essence, your device in your hands becomes a tool for accessing your assets in a decentralized application.
This is how I would formulate this answer, but the question is very good. How to explain this to a simple user in an understandable language, in simple words, completely correct and correct is not entirely clear. The technology is too new for me to formulate it all so well and quickly.
Do you have to understand smart-contracts to use DeFi?
In crypt, in general, what is called “no-brain-movement” is now very actively promoted. That is, don’t ask what’s going on, just throw it in and we’ll make money. Especially when there is a bull market. 90% of users on the market are not looking for technology, but to get rich. This is a slightly different focus on everything that is happening. I understand that Guide DAO is more focused on development, and hence these questions. But in reality, I am sure that 90-95% of participants will not ask it and will not even be able to formulate it.

Which direction should developers move?

Trends and narratives are only discussed when they already exist. Where to look in development? First of all, what do you like, what do you like?
Where you have fun, cheerfully, where it’s burning, that’s where you should look. And then look at what exactly can be improved in a particular application.
That is, I can say “cut your wallets – it’s profitable.” Get yourself a good wallet, it will probably be cool. But then again, what is a good wallet? We need to open up this topic and discuss it. Make a good exchange for derivatives trading with high leverage to make it convenient. How to do it? What is needed for this? What interface? This is also a topic for a separate large discussion. Or release an NFT collection that hasn't existed yet. Draw something beautiful if you are a designer or artist. What collection didn't exist? Why will she get pregnant? There is a lot of everything, it is very difficult.
In addition, you can do what you see specifically problem, and you know how to solve it. The example here is the most banal. The first DEX based on AMM technology on a liquidity pool was a protocol called Bancor. I think that those who came to crypto six months ago have never heard of them, but everyone has heard of Uniswap. And Uniswap did a very simple thing regarding Bancor. In Bancor, all exchanges were made through their local BNT token, which cost very little, was difficult to scale, and because of this the user had a lot of problems. And Uniswap just came and said: this is a cool thing, but let’s do all exchanges via ether. And in the first version, they made all exchanges through ether, which was quite liquid even at that time, and it was convenient for everyone to exchange into ether, and from ether, and through ether. And then they said: let’s turn any asset into any asset. And it went off. Compare today's capitalization of the BNT and UNI tokens.

Liquid staking and re-staking

This is a cool topic. What is this? As I said, here are the three basic operations of DeFi: crypto lending, exchanges, issuing derivatives. There are different classes of derivatives issuance. First: we take a fiat dollar piece of paper, put it in a chest, and in the crypt on a smart contract we create the equivalent of this green piece of paper. Well, they put in 10 dollars and made 10 USDT – a stable coin, which is equivalent to those 70 pieces of paper that, we hope, are in this chest. This is the release of a stablecoin, also a derivative in essence, which provides a real asset. And we have ether, for example, it is beautiful, wonderful, delightful, no paperwork is needed, but in order to make the ether network safe, we validate and check transactions, offer new blocks to the network, fill the blocks with these transactions from the mempool, we validate them, and for this work, accordingly, validators are rewarded with a new emission of ether. At the same time, so that they behave honestly and do not play pranks, no one breaks the rules of the game, they stake the air. That is, they lock 32 ethers on one node each in order to launch their node.
Accordingly, these 32 ethers at this moment become illiquid, that is, you cannot sell them, you cannot use them, and so on, but at the same time you earn some kind of profitability from this. And so some protocols came up with such a thing that, they say, you give us ether, we will launch a validator for you, put it in staking, we will validate blocks of transactions, receive a reward for this in the form of a commission for transactions of new ether, and give you a part of this percentage , take a small part, a small commission for yourself for this.
And instead of the fact that you staked ether with us and receive a percentage, we will give you a candy wrapper of ether, if we are talking about Lido, then this is called Staked Ethereum, Staked ETH. A percentage is added to it - once a day, the amount of Staked ETH is updated in your wallet. But at the same time, it is absolutely liquid, you can sell it on the exchange at any time if you want to return to native ether, you don’t even need to come to us to do this unstaking. You can put it in some kind of DeFi tool, in the same landing protocol, earn an interest-bearing deposit, or you can come up with something else, whatever you want. Therefore it becomes liquid. Actually, this process of issuing this liquid staking derivative is called liquid staking. That is, you stake, but at the same time you receive a liquid asset with which you can do whatever you want.
And restaking is completely new and fresh. Appeared, in my opinion, at the beginning of 2023. The first project went live at the end of 2023 - Agent Layer. Now he goes to Mainnet with his token, everything is already running there. What does this protocol do?
This is the level of security that firms are provided with, that is, all those validators who make transaction blocks, they have a very high level of security, that is, about 900 thousand nodes. But new projects, protocols, L2, modular blockchains, and so on are coming out. They come out with a small set of validators, and their security level is much lower. So, if we take some of this security from the ether, from the ether validators, and add it to these new networks, then they will be much safer, it will be better to work with them. In return, these networks will give the reward, respectively, to those ether validators who agree to provide them with this additional security. What do validators do for this? They restake their ether in the restake protocol. The re-staking protocol defines the rules by which these new added protocols need to be validated and checked, which, as it were, additionally draw on the security of the ether for themselves. Accordingly, this works in two ways: security is transferred from the ether, and rewards are dropped from the new protocols for the fact that the ether validators take on additional load and risks. Now this is re-staking.
And there is also liquid restaking. This is when you restake through some intermediary, and he gives you a liquid piece of paper that he will restake your ether for you. That is, he also put it into staking, launched his ether validator, and also Eigenlayer launched its own node in order to take additional rewards and risks. And these rewards will be paid to you, and at the same time you have liquid piece of pape that you can sell, put in DeFi: in a landing page or in another protocol. Everything depends on you. This is how lego it turns out.

Restaking of restaking

I asked this question at the conference. I say: “Here we have restaking, we have liquid restaking, and when the circle closes, what will happen there – a singularity?” The speaker laughed and said that this is a very good question, that there is no limit to perfection. That is, after all, some add-ons even over re-staking are possible. He said he doesn't know what that would look like, but it's certainly possible, there's just no use case for it right now. That is, it’s easy to restake what was restaked completely pointless. However, if there is some layer above the restake for a really important, necessary use case that solves a specific problem, then why not.

Investment strategies

Only in long. Naturally, there are stages of the market that you try to enter. Naturally, at the top of the market you want to fix more. It is clear that where the profitability is higher, most likely, the risks will be higher. Therefore, I prefer more conservative options, that is, the higher the return and the greater the risks, the smaller the amount I put in if I really think it makes sense. Let's just say that I don't sit around calculating on a calculator how much I should get, what the percentage of return will be. These are rather some internal feelings about evaluating the project. Well, what kind of investors are there, what does it look like, how does it work, how well, banally, the team’s website is made, what they write on Twitter, what’s going on in their Discord. And from this some kind of criterion is formed. Or whether other fellow influencers talk about these things, what they say, how they say it. That is, I proceed from these criteria rather than sit and cruelly calculate.
And I’ve already started to take a philosophical approach to portfolio declines. Sometimes it happens, it hits everyone for different reasons. That is, not without it. But it’s no longer like, “Oh my God, I’ve lost everything, I’m urgently leaving the market.” No, you just understand what is happening and wait. Yes, sometimes you have to wait a long time, it’s dreary, intense, painful, dismoralizing, and you don’t want to do anything. This is true. But you still understand that, as a result, one way or another a new cycle will come, where everything will be fine, and we will all make money. That is, I take market movements quite lightly. But when it comes to hacks and losses, which are called the “black swan”, I worry more about this, yes, because it came from where I didn’t expect it. Especially if you can’t return the funds one way or another, yes, sometimes you tilt for a day or two, but in general you let go, because you still see that your diversification is working, that, let’s say, 1% was hacked and stolen, but 99% remains, which means the strategy still works.

Occuring problems and how to solve them

Firstly, I am alone, but there is a lot of information. I don’t have time to accumulate everything, and some things are missed and forgotten. Some position may go beyond the limits, well, that is, liquidity may go beyond the limits of the concentrated order, somewhere there was a loss, somewhere there was a hack. That is, I don’t have time to track everything. I try to devote at least 1.5-2 hours a day to this. Here, I probably want to say thank you to DBank. They have very cool management and a well-made portfolio. As a person who sells data, I will say that DBank’s data coverage is the best, really. They have a problem with technical support and the way they communicate with clients, and it’s expensive there. But their coverage is very good. And they help me a lot with this.
Secondly, this is bad UX. In fact, for most protocols it is very complex. And in general, the complexity of the tools makes them difficult to explain to the average user. This is also a definite problem for the DeFi sector as a whole. It's a shame that there are very few protocols that issue unsecured loans in a non-custodial manner. It is clear that this is all complicated. It is clear that there is no institution of reputation. By the way, this is about problems that exist and cannot be solved. Solve the problem of no one's reputation. And how to issue unsecured loans so that everyone is happy and no one is deceived. This is a really good case, I think.

What to read

There is a translation into Russian of the books CoinGecko and How to DeFi, there is a first edition for beginners, and a second – Advanced. A lot of things don’t work like that anymore, a lot has changed, but to have a basic understanding of what works, I think these are really useful books.
There are a lot of DeFi videos, they are mostly in English, where dudes somehow tried to draw diagrams and explain what works. I think the channel was called Kerman Kohli. He explained a lot there, drew pictures of how it works, what it looks like in DeFi, how it works. There is also a channel called Ceazor's Snack Sandwich. There the guy draws diagrams on a white sheet of paper showing how it works in the protocols. But still, it seems to me that this is a little more for advanced users, although it has old videos with such basic protocols as Pancake, Uniswap, Aave.
There is also Whiteboard Crypto. But in general, I would advise starting with crypto slang. There are dictionaries. This is probably also not entirely accurate information, it is not given exactly as it exists in reality, but you need to start somewhere. That is, start with slang, and then try to look for channels that show what and how it works.
And there are really few tutorials like Pendle’s. The difficulty with this is in crypt, This is true. Therefore, I cannot recommend any specific course where to study.

Advice

Firstly, your thirst for new things, for technology, is wonderful, it’s great. There is a very large space for work here, there is a lot of things that still need to be done, things that have not yet been fixed. And there is a lot of what is missing. Therefore, the room for maneuver and enrichment through the development and creation of new products is truly enormous. There are a million possibilities here, and if you have a passion for this, you are interested in understanding this, then continue, and regardless of the market phase, you will be in chocolate.
In 2019, it seems, we interviewed one of the founders of the IOTA protocol. This is a protocol that deals with the Internet of Things on the blockchain. And when my colleague asked him the question “How to get rich in cryptocurrency?”, he said that the easiest option is to create your own cryptocurrency. Therefore, developers in crypto are much richer than investors. Therefore, this is a parting word, fellow developers.
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