What Would It Take a Developer to Get into Defi in 2023?

Decentralized finance has seen significant growth since its beginning in 2018. As the sector grew, new protocols and technologies emerged, from decentralized exchanges to yield farming and lending protocols. Let's look at decentralized finance and what it would take for developers to join the growing ecosystem.

On the 8th of December, the highly anticipated RadFi 2022 event, hosted by Radix CEO Piers Ridyard and CPO Matthew Hine looked at the current state of DeFi and how it needs to evolve. The event featured a dramatic and powerful discussion on the current issues within the DeFi space and some solutions to help the sector grow. We'll look at some key talking points covered in the event. First, let’s take a quick look at decentralized finance and how it works.

What is DeFi?

Decentralized finance, or DeFi for short, is a rapidly growing area of the blockchain industry focused on creating decentralized financial applications and services. DeFi uses blockchain technology and smart contracts to enable the creation of decentralized applications (dApps) that people can use for a wide range of financial purposes, such as lending, borrowing, trading, and more.

DeFi aims to provide financial services that are open, transparent, and accessible to everyone without the need for intermediaries such as banks or other financial institutions. The process is made possible through blockchain technology and smart contracts, which enable the creation of decentralized applications (dApps) that can be used for various financial purposes.

Speaking of smart contracts, there are only a few developers within that field that are currently active in the crypto space. During the RadFi event, Radix CEO Piers Ridyard weighed in on this saying, “There's about 20,000 smart contract developers working full-time in DeFi and Web3. That's great, but it's a fraction of the 27 million developers worldwide. In just two years, DeFi grew from a billion dollars under management to over $200 billion. That's incredible, but still just a rounding error on the $400 trillion global financial system.”

Ridyard continued, saying, “Most importantly, though, how many people do you know personally who regularly use Web3 and DeFi? Probably less than a handful. Why? Because Web3 and DeFi needs to become actually usable first. Users need their DeFi experience to be as safe as traditional finance and as intuitive as the best Web2 apps.”

“Developers need tools that let them express their Web3 ideas easily, quickly, and safely. Entrepreneurs need network infrastructure that scales and a pool of talent that can keep up with their Web3 ambitions.”

This goes to show the lack of developers and users in the DeFi space and the need for more developer-friendly tools in the sector. Ridyard continued to delve into this topic more, saying, “Game engines like Unity and Unreal took care of the standardizable low level stuff that every game depended on. They gave game developers general purpose rendering engines, general purpose physics engines. The bugs got way smaller and less hairy, and the games got larger and more complex.”

“And what's more, they brought libraries of reusable art and in game items, they brought community. And what happened? The developers flooded in, the entrepreneurs flooded in, the users flooded in. Gaming went from a cottage industry to one that is now bigger, the music, TV and film combined, all thanks to the invention of an engine.”

Using the gaming industry as an example, Ridyard highlighted how standardized tools with asset libraries are made available to builders, which attracted additional developers into the space. Ridyard also mentioned how Radix is using the same approach in the crypto space to attract more developers into the DeFi sector.

“Radix has applied these lessons to decentralize finance and Web 3.0, we call it the Radix Engine, and it's where execution and assets are combined with consensus in the next layer of the Radix stack.” Ridyard explained, continuing to say:

“We've taken all of the hard, low level work that Web 3.0 and DeFi developers on other platforms are spending 80% of their time worrying about and simply removed it. In the Radix Engine, asset behavior is baked in."

"Users no longer have to wait for wallets and applications to integrate the new token types they want to own. With the Radix Engine, new token types, like soulbound tokens, can be deployed and are instantly compatible with all applications and wallets.”

Creating standardized tools is key to the continued growth of the DeFi sector and additional programming languages can help with widening the available talent pool. Ridayard highlighted the need for a programming language that would enable the Radix Engine to be used to it’s full potential.

“We still needed a programming language to let developers unlock the full power of the Radix Engine and Cerberus. For the internet to really take off, it also needed a programming language built specifically for programs to run in web browsers. JavaScript was created and suddenly the browser could react intelligently to user input without needing to run back to the server for a whole new page every time.” Ridayrd said, continuing to say:

“The invention of JavaScript led to an explosion of innovation, and took the internet from the static websites of the Web 1.0 era to the dynamic social media giants that dominated the Web 2.0 era. Facebook, YouTube, and Twitter would literally be impossible without JavaScript.”

During the event it was also mentioned how the Radix team had built a programming language with the purpose of servicing the Web3 and DeFi space. During the RadFi event, Ridyard explained it in detail:

“We've done the same thing for Web 3.0. We've created a programming language specifically for the needs of Web 3.0 and DeFi, and it's called Scrypto, the next part of the Radix stack that makes Web 3.0 easy to build and deploy. We knew that to get 27 million developers into Web 3.0 coding had to be as intuitive as possible, so we started with the user experience first. Something that JavaScript really should have done.”

Ridyard continued to say, “Over a year and a half, we showed nearly a thousand developers how to program in an asset oriented way using Scrypto with the Radix Engine. Interview after interview, you could start to see the light bulb moment when it clicked.”

“Many even went home and started building Web 3.0 programs in Scrypto code without any prompting from us, having only seen the documentation once. Some developers have even told us that it feels like cheating to build Web 3.0 or DeFi DApps using Scrypto. That's what happens when you design tools that provide the absolute shortest path from idea to implementation.”

Having access to specialized tools and programming languages can play a huge part in the growth of DeFi and the creation of new platforms and protocols. Let’s take a look at the benefits of DeFi in the next section.

Benefits of DeFi

One of the key benefits of DeFi is that it allows users to access financial services directly without the need for intermediaries such as banks or other financial institutions. As a result, it can help reduce fees and other costs and increase the speed and accessibility of financial services. Additionally, because DeFi is built on blockchain technology, it offers increased security, transparency, and immutability compared to traditional finance.

Users have complete control over their funds and assets in a decentralized financial system. As a result, they can access a wide range of financial services without a central authority or intermediaries. This enables users to conduct financial transactions and manage their assets more openly, transparently, and securely.

Decentralized finance represents a significant shift in how financial services are provided and accessed. By using blockchain technology and smart contracts, DeFi has the potential to democratize finance and make financial services more accessible, transparent, and secure for everyone.

Many different DeFi protocols and platforms are available, each with unique features and capabilities. Some of the most popular DeFi platforms include Ethereum, Radix, EOS, and TRON, all blockchain-based smart contract platforms that support the creation of dApps. Other popular DeFi protocols include 0x, a decentralized exchange protocol, and MakerDAO, a decentralized lending platform.

Decentralized finance, or DeFi for short, can provide a wide range of financial services through blockchain technology and smart contracts. These services include, but are not limited to, the following:

• Lending and borrowing: DeFi enables users to lend and borrow funds directly from one another without intermediaries such as banks or other financial institutions. It can help reduce fees and other costs and increase the speed and accessibility of lending and borrowing services.
• Trading: DeFi allows users to trade various assets, including cryptocurrencies, tokens, and other digital assets. Users can trade through decentralized exchanges built on top of smart contract platforms like Ethereum and allowing users to trade assets more securely, transparently, and in a decentralized manner.
• Insurance: DeFi can also provide decentralized insurance services, allowing users to pool their funds together to protect against certain risks. It can help reduce insurance costs and make it more accessible to a wider range of users.
• Payments: DeFi can be used to create decentralized payment networks, which allow users to make fast, secure, and low-cost payments without the need for intermediaries. It can help to improve the accessibility and efficiency of payment services, particularly in areas where traditional financial infrastructure is lacking.

Decentralized networks and smart contracts allow DeFi applications to operate trustless, open, and transparent without intermediaries such as banks or other financial institutions. Additionally, this can enable more inclusive and accessible financial services, as well as new business models and revenue streams. However, DeFi is still a relatively new and rapidly evolving field, and many of these potential applications are still being developed and tested.

DeFi has the potential to provide a wide range of financial services in a more open, transparent, and secure manner. By using blockchain technology and smart contracts, DeFi has the potential to revolutionize the way that financial services are provided and accessed.

What would it take for developers to enter the DeFi space?

Developers need to have a solid knowledge of blockchain technology and the fundamental ideas of decentralization to join the decentralized finance (DeFi) industry. In addition, they would need to have experience with the construction of smart contracts since many DeFi initiatives are built on top of smart contract platforms such as Ethereum. 

In addition, developers need to have a strong understanding of the principles of decentralization and how they are applied in finance. This includes understanding how blockchain technology works and the technical challenges and limitations of using blockchain for financial applications. Developers also need to be skilled in smart contract development, as many DeFi projects are built on top of smart contract platforms like Ethereum. Additional programming languages like Scrypto are also showing some potential for DeFi developers with its asset-based language.

Ridyard, broke down the Radix engine and how the Scrypto programming language can improve the DeFi space, “With the Radix Engine, Scrypto puts assets, accounts, and permissions at the heart of the programming language. Scrypto makes DeFi, NFTs, tokens and liquidity pools all core to the language. It treats asset security as a primary function, not an afterthought. It makes digital assets feel like physical objects. Scrypto is the world's first programming language built specifically for the needs of Web 3.0.”

“It went into early access in December of 2021. Since then, it has become one of the fastest growing languages in this space. In just 12 months, Scrypto has gone from zero to over 4,500 developers learning the language, and we've had some incredible feedback along the way.”

Ridyard continued to say, “Things like, "I still find it hard to believe I was able to make that in just a few days." And, "As a Google software engineer, this has to be one of the best programming languages I've seen yet." And even, "I have programmed in Solidity, Plutus on Cardano, and the Fe-language on Ethereum, and I can guarantee you that Scrypto is the best I've had in my hands." And more, loads more just like that.”

Conclusion

Developers need to understand the particular technological obstacles and constraints associated with the DeFi sector, such as scalability and interoperability. 

In addition to technical skills, developers entering the DeFi space should also have a good understanding of the various DeFi protocols and platforms currently available, as well as their unique features and capabilities. It will enable them to choose the right platform for their specific project and ensure that their dApp can integrate seamlessly with the rest of the DeFi ecosystem.

Entering the DeFi space requires a combination of technical expertise. It also requires a deep understanding of decentralization and blockchain technology. By possessing these skills and knowledge, developers can create innovative and impactful DeFi projects that have the potential to reshape the world of finance.