The software developer and entrepreneur predicted that many projects in the DeFi sector will not survive the next five to ten years
In a recent YouTube session, Cardano founder Charles Hoskinson shared his outlook for the future of decentralized finance. Hoskinson, who has positioned himself as a figure seeking to reshape the industry, predicted that many active DeFi projects will be removed from networks within the next five to ten years.
He pointed to a lack of long-term vision and rigorous engineering as the main reasons most of these projects will fail. Hoskinson said the industry is saturated with initiatives driven by a “hope and pray” mentality, and emphasized that this approach is not enough to sustain them.
“It is very hard to do this kind of engineering well, with an eye and foresight for the future. Unfortunately, many projects in this space will not stand the test of time. We will see a large extinction occur in the next 5–10 years; the incentive to do things properly is so you will be present for that mass extinction event,” he said.
Poor application quality harming the ecosystem’s reputation
Hoskinson argued that many current projects are of “low quality,” citing this as a key reason for dissatisfaction within the DeFi community.
“Many of you are tired of exorbitant costs, lack of clarity, and the poor production quality of applications in the DeFi space,” the Input Output CEO told his viewers.
To support his point, Hoskinson noted that DeFi has seen a number of hacks that resulted in substantial financial losses. He specifically referenced vulnerabilities in parts of the Ethereum ecosystem that have been exploited, leading to losses estimated at $10 billion so far this year.
Survival of the fittest
The Cardano leader also observed that DeFi has become an environment where only projects that reach the top tiers tend to survive. During the 28-minute session titled “DApps and Cardano DeFi Alliance,” Hoskinson described Cardano as a project working to address existing weaknesses.
He added that Cardano’s DeFi platform prioritizes elements such as public-private partnerships and certification standards to make it more relevant and secure. Hoskinson argued that industry-wide certification standards would help establish clearer criteria for evaluating the value and reliability of DeFi projects.
More developments on the horizon
The tech entrepreneur predicted that 2022 would be an important year for Cardano as the network undergoes further significant developments. He disclosed a joint venture called the Cardano DeFi Alliance, composed of various developers collaborating to advance the blockchain. The stated aim of the alliance is to build a robust and dynamic ecosystem that can serve as a trailblazer within the DeFi sector.