Why the scattered DeFi sector needs aggregators
Applying the internet power laws to crypto coverage
The crypto market can be overwhelming. This is especially the case since the explosive rise of DeFi since the summer of 2020, which gave way to hundreds of both brilliant and terrible projects and everything in between.
We have seen this happen before on the internet. First it was websites, then it was blog posts and soon it was images, videos and whatever else people could come up with. In crypto, the chaos started with ICOs in 2017. Now it has emerged yet again with DeFi dapps, NFTs, DAOs and whatever awesome innovations that are yet to emerge.
It is nearly impossible to keep up with this industry. Meanwhile, the risks are stacking up as a lot of applications in crypto copy each other’s code or are reliant on other dapps. To help investors protect themselves against these risks, risk coverage apps are rapidly emerging. But yet again, people will easily get lost in the vast number of coverage platforms that are about to go live.
The problem is quite clear, and so is the solution. We need aggregators that offer users a platform to find everything about a specific sector in one place.
The power law of the internet
Herbert Simon once said that “a wealth of information creates a poverty of attention”. This is especially true on the internet, where anyone from (almost) anywhere can upload whatever content they want to share with the world. While this gives us an incredible view of the world, it is also super chaotic.
To solve this chaos, aggregators soon arose. Google aggregates websites, Facebook aggregates social contacts, Airbnb aggregates places to stay and Uber aggregates ride-sharing. Instead of having to scour the internet for the perfect match, these aggregators have turned the internet into quite an orderly place by concentrating content on one specific platform.
This also led to the discovery of the most important power law of the internet, network effects. Instead of having hundreds of different aggregators, it turned out that once a platform reaches a certain size, almost everything started to move to these platforms. Why use dozens of different websites when you can find everything in one place?
Crypto: the market that never sleeps
The crypto internet, or the internet of value, is at a similar stage as the internet was in its early days. Dozens of different protocols and thousands of applications and tokens are vying for users, attention and investors which has turned this new internet once again into a chaotic place.
And it’s even wilder than before as there’s a lot of money at stake. Most cryptos are essentially financial products and nothing turns people more irrational than the prospect of easy riches. Additionally, the code for DeFi applications is open source, which means it is easily copied. Whenever an innovative new dapp such as a decentralized exchange or yield farm launches, clones with a few tweaks pop up like mushrooms in the weeks following.
These risks are growing commensurate as most of these dapps still include bugs, flawed logic and leave room for economic exploits. Risk coverage platforms are coming to the rescue, but you guessed it, there will be many different ones on different protocols with different tokens and different specializations. We need to bring them all together under one roof.
Why aggregators are positioned to win
Aggregators provide order in chaos by bringing fragmented industries together on one platform. This function is incredibly valuable for end users, who simply have to visit one website instead of dozens and can conveniently compare and choose what’s best for them. Bright Union is such an aggregator, specifically for crypto risk coverage.
Aggregators bring transparency to the market. Individual platforms can obscure details, but an aggregator platform simply shows how all different providers stack up against each other. For the user, this makes it easy to find the best in class. But this is not the only benefit, as the transparency and comparison also create competitive pressure for risk coverage providers. When everything is mapped out on an aggregator platform, users will choose the best quality/price offering without the influence of persuasion techniques.
A critical component in this is that the aggregator is objective, which Bright Union has set out to always be. We see ourselves as the neutral hub for DeFi risk coverage. Our platform is blockchain agnostic, provides visibility to any professional risk coverage application and is designed to be the one-stop marketplace for risk-related products and services.
Instead of having to visit dozens of platforms looking for the specific coverage product you need, everything will be organized in a single interface. Our partner Nexus Mutual is the first to onboard and with Bridge Mutual as a close second, with two other coverage platforms following soon. We’re expecting many crypto coverage platforms to launch over the next months and years and aim to have all of them under our roof. A stake in Bright Union is a diversified stake in the crypto risk coverage sector as a whole.
About Bright Union
Bright Union is launching the world’s leading aggregator and accelerator for the crypto risk markets. Our mission is to make the crypto risk markets work. On our decentralized crypto coverage platform, crypto users can cover their assets, stake and cover the community, and earn guaranteed yield through Bright Staking with embedded coverage.
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