The recent crypto crash presents an opportunity for decentralized finance (DeFi) firms to rethink how this entire system works. And according to Kieran Mesquitachief scientist of RAILGUNthis gives us a chance to rebuild it.
There are some steps crypto businesses and projects can take now to create a more secure and stable future for decentralized finance (DeFi). Because crypto projects cannot exist without their investors, they must diversify their target audience, take responsibility for educating them, and go beyond moonshots.
If cryptocurrencies want to be considered real currencies, they have to start acting like one.
It is essential to have a wide variety of investors
Cryptocurrencies, like any other currency, are most successful when held by a variety of holders in a variety of settings. Think about it. Everyone, everywhere, has some form of fiat note or coin in their possession. Regardless of socio-economic background. This is what crypto should strive for.
The best way to inject reliability into crypto is to spread it around as much as possible. Companies that have investments in DeFi are incentivized to opt for security, in order to protect the interests of shareholders.
Hedge funds are able to take big risks because they have the financial leeway to bet without restraint on different coins and tokens. Day traders add extra thickness and depth to the distribution, which can prevent currencies from swinging too quickly. When will we reach the stage where casual investors can be found everywhere?
To achieve this, industry leaders must design technology that is clear, easy to use and, above all, easy to access. The current highly centralized distribution of cryptocurrencies betrays both its principles and its promises.
How can business leaders solve this problem? By identifying target investors (and users) like well-run companies do.
Instead of courting whales, blockchain projects should focus on attracting and retaining a wide range of investors. Companies like E*TRADE and Charles Schwab, for example, know the popularity of crypto and offer guidelines for their investors. There is a growing potential for crypto projects to woo the same investors who entrust their long-term investments to these companies.
In the world of fiat money, no one invests their entire retirement; so why do many crypto projects assume that investors will do the same? The past few weeks have proven that portraying crypto as a get-rich-quick scheme is wrong.
Industry leaders need to present their ideas as stable, long-term projects. It’s time to stop portraying crypto as a modern form of gambling and instead demonstrate its utility as a decentralized currency designed for the long haul.
With this in mind, blockchain projects need to clearly define their identity, their long-term goals, and what they hope to accomplish.
At RAILGUN, we have prioritized transparency on our website by showcasing our key team members, their individual references as well as links to professional pages. When potential investors look at our project, they know exactly who we are and what our skills are.
Be able to allow potential investors to know your business model
The most important difference between cryptocurrencies and fiats is the rapid change in value that digital currencies can experience.
This may sound spectacular to early investors, but the specific drive to find a coin or token that will go “to the moon” ends up ruining the chance for these currencies to possess any functional value other than that of a security.
If DeFi leaders are serious about driving widespread adoption and successful use of cryptocurrencies, they need to do what every great movement does: invest in educating people at all levels.
Crypto projects should use their best asset: proximity communication, and use it to make themselves as transparent as possible. Listed companies are required to hold a shareholders’ meeting once a year; crypto projects should do the same monthly, or even weekly, and actively invite community members to ask questions of our dev team in real time.
Crypto is founded on the mantra “do your own research” (DYOR from English do your own research), but successful and trustworthy projects need to be upfront and forthright about the risks associated with using the protocol and the future of our developments.
Crypto industry leaders need to help people do their own research by providing them with as much information and access as possible, and as often as possible. We need to end the era of blockchain projects gaining popularity with grand plans and vague roadmaps.
At RAILGUN, we spend a lot of time and energy explaining our technology to our community and answering any questions they may have. By prioritizing access, we are able to foster a culture of constant knowledge sharing.
This approach does not have to be radical; it just has to be consistent. We’ve ensured this consistency by hosting weekly DAO-wide Discord calls and posting to the Medium blog every two weeks.
Another way blockchain projects can educate a range of potential investors is by fostering the formalized study of blockchain technology, cryptography, and decentralized finance at the university level.
Students can clearly learn fiat currency economics in college. Now that cryptocurrencies are a real reality, leaders in our industry must focus on developing the basics of blockchain technology and training teachers in this field.
CoinDesk has already started compiling an annual ranking of the best universities for blockchain studies. We are currently observing a push to foster the future of deep technology in European universities, such as University College London or Oxford, and the community contributes to this trend.
For example, IOTA recently made a donation to Imperial College for study distributed ledger technology, and other leading projects are participating in similar initiatives. These students could just as easily be future cryptologists, data scientists, and blockchain developers. Why couldn’t the crypto space welcome these new talents?
Don’t be afraid to look like a traditional finance company
The main problem facing crypto is that many would-be investors remain wary – especially those outside of the tech scene. After this crash, who can blame them?
The crypto industry currently operates like a dysfunctional religious cult, with insider information shared in closed channels where its followers are constantly hooked by flashy distractions.
YouTube personalities operate as preachers, developing an audience monetized by the cult of fame. The real work of educating the public about crypto has been entrusted to journalists and periodicals that produce an endless stream of introductory crypto and blockchain discovery articles.
The future of crypto currently rests on the shoulders of journalists, who are tasked with writing multitudes of articles on “what is X” when everyone is best served by journalists who have the time and ways to explore the “why” of these technologies.
A crypto community
Ultimately, it is against the interests of crypto companies and blockchain projects to narrowly educate “crypto bros” who already know the technology through Discord channels and complex, specialized technical platforms.
If decentralized finance is to become mainstream and replace fiat currency, there must be a large-scale shift to education with the same ubiquity and veracity as traditional fiat currency. The sector should look to more traditional finance to discover the multitude of means of education and access available to the general population.
For example, crypto and blockchain projects can hold workshops that are public and easy to access, as banks and fund managers do. There are newsletters and magazines from major trust institutions that cater to young investors, older investors, or investors with families.
The Financial Industry Regulatory Authority (FINRA), a US non-profit organization, offers a program to learn to invest. In the UK, Hargreaves Lansdown offers many free resources to help beginners understand portfolio building. These targeted outreach methods are tailored to specific demographic groups to provide financial education.
In our case, we’ve found that the best way to educate our community is to host weekly calls outlining everything about our technology, smart contracts, and crypto.
The crypto industry can change right now
The crypto sector has already experienced crashes and will experience more. However, future crises can be minimized if companies take this opportunity to reassess their modus operandi. It can mean letting go of the mentality “go big or go home” [tout ou rien] to make more room for projects that are pursuing slow and steady growth.
As soon as the market picks up again, this window of opportunity for change will close, and all DeFi players will start crossing their fingers again and praying that the blockchain will be favorable to their investments. Crypto doesn’t need to work like this, and it’s time to embrace positive change based on what has served traditional currencies successfully.
About the Author
He has extensive experience in developing technologies for blockchain and DeFi projects. Kieran was an early adopter of BTC and one of the first people to develop its GPU mining software.
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We wish to say thanks to the writer of this short article for this amazing material
Crypto Crash: What Should Industry Leaders Do To Avoid This In The Future? – BeinCrypto France
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