As DEXs struggle, new approaches kindle hope
Despite their popularity, DEXs have a number of drawbacks that may be preventing growth. A new approach, however, has offered a way forward. In May 2022, at the tail of the crypto bull market, economist Eswar Prasad wrote an op-ed for the Financial Times arguing that DeFi’s promise as a means of democratizing finance was a long way from being realized. In his words, “For all its promise in democratizing finance and broadening financial access, the emerging reality suggests a concentration of economic power, while the risks fall largely on those investors least able to handle them.” Prasad is right that early DeFi projects catered almost exclusively to crypto natives, often called “degens” in Twitter parlance. However, he didn’t acknowledge that this is in fact a common pattern for any nascent industry crossing the chasm from fringe to mainstream adoption. New, transformative technology frequently starts out looking like a toy. The internet went through this same phase, as did many of ...