DeFi: An Unstoppable Wave?

Pluto’s mission is to make DeFi more accessible to everyone. We are shortly going to release a reimagined white paper on the YOP DeFi platform and protocol. But before we do that, today we are releasing a primer on DeFi for newcomers to the sector called “DeFi: An Unstoppable Wave?”

The primer is a result of a partnership between Pluto and an MBA team from Smurfit Business School (Smurfit) at University College Dublin (UCD). The origin of the partnership is that one of Pluto’s co-founders, Barry Downes is a past Smurfit MBA graduate and earlier this year was part of Smurfit’s Mentor programme for the MBA class of 2021. As part this programme Smurfit asked if he could help provide some topics for a final MBA project that MBA teams could self-select to tackle. Barry provided a number of project topics, and a team came together in Smurfit to research and develop a project on DeFi. The net result of this collaboration is this new primer paper, which we believe contributes to the knowledge base for newcomers to the DeFi space. We are proud to have worked with Smurfit and supported the MBA team of Chris Powers, Conor Hyland and Kevin Mathews develop their original MBA project and then help turn the project in the primer paper that we are releasing today.

DeFi is a key focus for Pluto, and in addition to relaunching the YOP project shortly, Pluto works with some of the most cutting-edge companies in the DeFi sphere through our ventures unit Pluto V. Pluto’s business unit Pluto Yield develops yield strategies and interacts with DeFi protocols, innovating the DeFi ecosystem to generate revenue. Pluto’s Metaverse business unit is its Non-Fungible Tokens (NFT) commerce and gaming business unit, trading in NFT assets, such as CyptoPunks and BAYC, Pluto Metaverse puts together joint ventures, develops software platforms and is soon to launch Play to Earn crypto games. Increasingly we are seeing crossover between DeFi and the Metaverse, with projects such as Theos, the instant liquidity protocol for NFTs. Pluto V, Yield and Metaverse are all supported by Pluto Labs, which is Pluto’s high- end engineering team that builds software to implement Pluto’s blockchain platforms. These are just some of the ways that DeFi is pivotal to the company, all pointing towards the seemingly “unstoppable wave” of DeFi.

Though this is an area with potentially endless possibilities, this subject can be incredibly tough to get to grips with for newcomers. Typically, most find there is a high barrier to entry and a steep learning curve to access most of the existing DeFi Protocols. Part of the solution will be answered through the work we’re planning in the redevelopment, reimagination and rebuilding of the YOP DeFi project. The other part we wanted to assist with by providing a solution that can be found in this paper. It is Pluto’s way to give back to the community and assist newcomers by sponsoring this group of MBA students, from UCD, to provide this entry-level guide to the DeFi space.

The beating of the crypto drum is only getting louder, particularly with the surge in popularity during the pandemic. As of today, 8th November, Coin Market Cap estimated that the global crypto market cap is $2.87T. “Crypto captures the imagination because of its ground- breaking technology, decentralised philosophy and the endless possibilities of digital cash”. Together with Pluto, Conor, Chris and Kevin’s goal was to create a white paper focused on DeFi, including the history, state of the art, and future implications for traditional finance.

Using research methods including, desk research, field interviews and active participation in DeFi itself, the white paper took shape. The guys interviewed nearly forty experts in the blockchain/DeFi space throughout the project, ranging from thought leaders, regulators, company executives, and enthusiasts. Pluto supported the MBA team with access to key members of its team, including CTO John Frizelle and other key team members for interview. Chris, Kevin and Conor’s enthusiasm for the project has been infectious, relearning the topic of DeFi through their 6 week journey was eye opening to say the least. Kevin’s first-hand DeFi participation study, see p28, in which he details the trials and tribulations of navigating the set-up of a MetaMask wallet and the Yearn and Zapper protocols, was a very amusing read!

Building up this picture of the DeFi landscape, the history of the concept and how it came about, the challenges the DeFi faces today; lack of a clear educational authority, sky high gas fees and difficulty navigating the dApps, to name but a few. While DeFi has the potential to re-write the current financial system, what challenges are we likely to face in the future? No white paper on this area would be complete without raising the notion of regulation. In Conor, Chris and Kevin’s words; “Fair global regulation is critical for the continued growth (of DeFi). Institutions will be hesitant to enter the market until there are clear guidelines. We urge regulators to create safe rules to protect consumers but allow the industry to continue to grow… Should regulation make it for difficult for DeFi companies to operate, you will see them move to areas of the world that want innovation.”

Co-founder and Director of Pluto, Barry Downes, commented, “the Pluto Digital team thoroughly enjoyed supporting Conor, Chris and Kevin on this project. It was great to see a Fintech savvy team research the DeFi sector and use DeFi services. Their practical experience with DeFi services helped them identify the massive potential of the sector and also identify potential areas of improvement. One of their key findings is that DeFi services, whilst incredible powerful and disruptive to traditional FinTech and Finance, are currently difficult to use and many services have not yet reached good levels of usability. Pluto agrees with these findings and having recently acquired the assets of the YOP DeFi project, is focused on re-imagining, redeveloping and relaunching it to be the most powerful and user friendly DeFi service on the market. We can’t wait for the MBA team and the YOP community to try it out and give us feedback. This paper starts with the question — is DeFi an unstoppable wave? The answer is a resounding yes! We agree and hope that this paper will serve as a great introduction to the DeFi sector for new commers. Pluto are shortly to launch a companion white paper on the new YOP project, and we would recommend reading this as a follow-up to this excellent introduction to DeFi.”

You can read DeFi: An Unstoppable Wave here.

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