A new system of Open Finance (DeFi), based on programmable money is being realized on Ethereum, a blockchain smart contract platform for decentralized applications (dApps). DeFi allows for complex financial transactions without the need to rely on centralized infrastructures, instead, letting users anywhere verify and trust the code themselves.
We are currently in the early days of DeFi and have the potential to transform global finance for the better or worse, depending on which trajectories the DeFi ecosystem coordinates around and steers towards. Although fully interoperable dApps can coordinate without friction, its builder individuals and groups cannot. In DeFi, such coordination frictions have resulted in many inefficiencies such as security risks, hacks, underfunded teams, and outright Ponzi schemes dominating the market. This limits the pace of innovation and the industry’s overall potential.
To help solve these coordination problems, we introduce PrimeDAO, whose mission is to:
Facilitate wide adoption of open finance by coordinating and cultivating projects that promote safety, reliability, liquidity, and open access, while avoiding centralized appropriation of critical financial infrastructure through decentralized governance.
Orchestrating Systemic Innovation
A high-level overview of the PrimeDAO ecosystem.
For many projects in the DeFi space, developing secure frontier technology is challenging enough. In the absence of a well-funded foundation, many projects have insufficient resources to properly develop, administer, and expand their offering towards mass adoption. PrimeDAO will cultivate a competent and well-funded builder community, establish coordination mechanisms that sustain ongoing operations, and become a much-needed DeFi Schelling point.
The DAO’s goal is to produce and maintain a community-owned set of products and services everyone can access and benefit from—both early and mass adopters!
PrimeDAO will initially prioritize projects addressing issues in four critical areas:
Liquidity: In DeFi, liquidity must be efficiently utilized such that slippage and user experience are on par with centralized exchanges. Aggregation and layer-2 technologies available today provide powerful tools that realize economies of scale. PrimeDAO’s first product is a liquidity aggregator that provides best-price discovery, slippage reduction, and reliable settlement.
Safety: Smart contracts need to be less exploitable than centralized exchanges and must function as intended under all circumstances (e.g. network congestion, rapid market movements). Cross-project audits, increased integration testing, ecosystem bug bounties, and insurance mechanisms can improve overall safety and confidence. As one of its first products, PrimeDAO will prioritize creating a decentralized DeFi Safety Interface that informs and guides DeFi adopters.
Reliability: Price feed accuracy and transaction settlement success rates must be on par with those of centralized exchanges. When things go wrong, consensus decisions on remedies must swiftly be enacted so that mainstream users feel as secure as they would using a centralized exchange.
Governance: PrimeDAO will govern and allocate resources towards contributors for building, auditing, and maintaining its DeFi mechanisms and products. PrimeDAO aims to form a widely networked organization of interlinked DAOs, builder teams, and key individuals that efficiently coordinate systemic DeFi advancement, forming a sustainable home and neighborhood for DeFi builders and enthusiasts.