Jean Rausis, co-founder of SmarDex, argues that decentralized finance (DeFi) needs to return to its original premise: peer-to-peer (P2P) lending. DeFi’s early focus on direct connections between lenders and borrowers facilitated transparent and trustless transactions, a stark contrast to the centralized structures dominating the industry today. However, over time, reliance on liquidity pools, external price oracles, and automated market makers (AMMs) has diluted this P2P approach. These systems, while facilitating quick access to funds and passive yield generation for lenders, have led to users being locked into pre-set pools with limited control over their assets and terms.
Rausis highlights the vulnerability exposed by the recent Hyperliquid exchange exploit. This event saw the platform override its own oracle system, resulting in a dramatic drop in TVL. This incident further emphasizes the fragility of the self-proclaimed decentralization that many DeFi projects claim to offer.
To achieve mass adoption, Rausis suggests a return to P2P lending as the foundation. This model allows users to negotiate fixed terms directly, choose their own collateral, and rely on decentralized pricing oracles, rather than relying on centralized entities for price manipulation.
DeFi’s success is tied to user control, transparency, and trust, features that are most effectively achieved through a P2P approach. This shift will attract both crypto-native users and newcomers seeking greater autonomy in their financial interactions.
Rausis emphasizes that while the DeFi market has shown resilience, it needs to move past its current challenges. DeFi needs to find a product fit that promotes simplicity, flexibility, and individual control, rekindling the core values of decentralized finance and fostering lasting global adoption.