PMF - Top 5 DeFi Apps in 2025 and What’s Still Needed | Danger, Today in DeFi | ETHTaipei 2025

[Music] Hey guys, welcome to my Ethi talk. My name is Danger. I'm a DeFi trader and farmer and I run today in DeFi, which is a DeFi news media and also research. Um, so we we are very active on chain. We use DeFi every every single day.

So yeah, let's get into it. So DeFi is Ethereum's number one use case by far. Like uh you know Farcaster is cool, Poly Market is really cool, but like if you just look at what's going on on chain, like it's like 99% uh you know, financial transactions. So uh there's a lot of stuff going on there, but I want to focus on the recent like innovative protocols. And the reason is there are like, you know, these really massive uh OG protocols and they're doing well.

They're also innovating. But I think DeFi is really about like disrupting finance. So the the new stuff is what is really uh for me really interesting. And this is not just like new and innovative. It's really these are projects which are really getting some traction.

Yeah. So the four the first one is Morpho. And Morpho um I find Morpho really interesting because like um like you you would think that oh if you have a new uh project that you want to improve things with, you're going to build more. But actually morpho what they're doing is they've actually uh like done less. So what they've done is like you know the original lending model in uh crypto was uh pulled lending pulled lending with a and compound and morpho they've uh drawn it back.

So it's like almost like a Unix uh like a cat or GP or um you know one of those smaller uh utility projects which you um would use with other projects to build something bigger. So so yeah they they just have a very simple isolated market um defi Lego and then they've outsourced everything else. So in a or compound you would have like gauntlet or a risk curator manage the markets and morpho doesn't do that. they just uh they actually um let Gauntlet or uh these other curators create their own markets, set their own parameters. So the the protocol itself does very very little um and strangely it's extremely successful.

So um yeah, you can see that they've grown massively over the past year and because they're they've uh they have these isolated markets, these markets uh compared to a pool lending model, they can um customize the risk parameters better for each use case like leverage farming or borrowing against ETH or LSDs. So that allows for higher LTVs. Uh everyone gets like better rates whether you're a borrower or a lender. So it's it's really cool and uh they've done more by doing less which is a little bit weird to think about. The second protocol which I really like is fluid.

So fluid is a uh lending protocol as well but it's actually kind of like a lending and dex protocol. So this is really interesting because um they uh they kind of discovered that you know the lending and dex liquidity can be shared. So they have like a a shared liquidity layer which they call fluid and then when you lend on fluid your your uh liquidity is also lping on their decks. So people are trading against it and the benefit of that is that uh you know lenders will get a better rate because they're not only getting borrower interest but they're also getting trading volume. And the same thing is true for the borrowers.

And the borrower side is actually really interesting. They call it smart debt and it's like you're reverse LPing. It's like a negative um LP, but it's still earning trading fees. So, when you borrow on a fluid, uh you're also getting trading fees, and that's also bringing down your borrow cost. So, it's it's a really interesting protocol which I think is very innovative.

And there's another there's a few other protocols uh like balancer and unis swap v4 which are doing combining dex dexes and lending to a lesser degree. So for balancer v3 they have boosted pools. When the liquidity is out of range it'll be lent out to a and it'll be earning some borrow interest. So it's similar idea but it's not quite as integrated as fluid is Jupiter. So Jupiter is less exciting from a technological standpoint but I think it's still extremely um illustrative for from a product standpoint because Jupiter uh they they started out as a Dexter aggregator.

I mean they are is dext aggregator and they really won the Salana market and it was because like um they had really good math they had really good routing they were kind of like the one in of Salana and on Salana I think even to this day there's no really other good dex aggregator competitors like before on Salana you would have to like go to five different dexes to do a swap uh to find your the coin that you wanted to swap on the experience was really bad but Jupiter just made it super simple to swap on Salana you just go to Jupiter for any coin you pop it in and then you just swap it. It's really easy. And the other side of Jupiter which I think is really uh important is that they create a perex and then they use the GMX model where users can easily LP into Jupiter. So uh you're not just trading on Jupiter. You can also LP and earn money on Jupiter which is really important um because those LPS they uh increase the volume um the liquidity on Jupiter per decks and then uh with more liquidity more traders want to trade on there and then more traders equals more volume the LPs get more fees.

So it's like this virtuous beneficial cycle and there's a lot of other projects which are similar. So, Hyperlquid is another example of this, but they didn't design it as well, so their HLP has issues. But you can see that this model of um a having a super easy uh swapping experience and then also having a LPN experience which is very easy and profitable is a a good one. Athena. So, this is my least favorite D5 project because it's not really DeFi, it's Cedi, but it's still uh illustrative because they've grown tremendously.

um they've been like the most uh successful stable coin this year. And uh what they've done is they've democratized is they've democratized basis trading. Basis trading is is like a hedge fund strategy where you buy a spot and then you short the per so you're delta neutral and then you earn the funding rate. And uh that's been historically a really good trade, but it's also been very complicated. Like in theory it seems very easy, in practice it's actually very hard to do.

Um but they've done it for their users and um it's amazing like it's just like where Jupiter has made swapping super easy on Solana like uh Athena has made basis trading super you you just buy the coin you stake it and you get some yield. So um yeah they've been super successful and their their standout has been um so other projects have tried to do this before but they failed and their their standout feature uh is uh great execution. And so they've done it. They've done this basis trading super well. You don't even realize they're doing it.

Um it's worked flawlessly. You just get yield. And even in situations where like uh by bit got hacked like uh the way that Athena had their uh their custodial setup was so good that even if Bybit went insolvent, Athena users would not have gotten a hit at all, which is crazy to think about. Yeah. But the downside is is it's extremely centralized.

Yeah. So, so what are the key points of uh D5 product market fit? And I think there's uh maybe two or three major points. Uh the first is that kind of like this restaurant example um where you have people in the front of the house like just eating uh the diners and you have the back of the house and whether you're eating at a like a street stall or a Michelin restaurant like the user experience for the front for the diners is the same. It's it should be really really easy.

You just sit down, you look at the menu, order some food, but in the background like whether it's like a you know a really unisoft v1 or like morpho or jupiter whatever like uh there could be a lot of really complicated stuff going on in the background but the user should never see that. Yeah. So uh you should basically assume your users are like 50 IQ which is an exaggeration obviously but the point is that like if you're a developer like you obviously are building the back end and you're like exposed to all this complicated stuff. So you may think like your level of competence is like super high but then you have to assume that your users are extremely dumb. Like think of the dumbest user half their IQ.

is probably how like how dumb you think your user should be because because then you'll build the user interface which will be really accessible which is what we need in DeFi. So they they just want convenience. Uh the other side of this is that obviously there there has to be chefs in the kitchen creating this yield creating this like nice swapping experience um or this like nice borrowing experience. So those are in morpho those are the curators in Jupiter that's the routing engine and the and also the JLP in fluid it's the it's actually the protocol in the fluid's case but yeah so you have this segmentation and um the back end it can be uh partly the protocol oftent times I think the best protocols are the ones where you've also uh incentivized professional pro- retail kind of like smarter retail users to LP in your protocol provide liquidity and uh market Cool. Yeah.

So, uh why would they do that? Basically, uh the way that you can get more sophisticated people to LP on your protocol is you provide them good yield, better than market yield. Yeah. Okay. So, a good way to think about it is um build ecosystems, not pyramids.

So, in DeFi summer, we were farming like food ponzies. It was just like you farm some like useless governance tokens and then you dump them on people later. So it's not sustainable. Um you want to have like this ecosystem like on Jupiter the uh you know the traders provide uh volume which provides yields. So the LPS uh LP they provide liquidity and then that feeds the traders and so on.

So like this nice beneficial uh cycle. So we have some good projects now. They're doing really well. So but what do we still need? So I think there's a two things that that are really good uh general things for builders to build even today.

One is privacy because like no one wants to be like recently there's a the hyperlquid wheel who was like hunted on chain and stuff. No one wants to see have their trades leaked and stuff like privacy is really important especially as more funds in the institution come into DeFi. So and yeah and people will pay for that like and the other thing is decentralization and decentralization is not just a meme it's not just a moral thing like um disintermed disintermediation pays so before only hedge funds could do uh yeah I think there's two parts of this one is democratization so making uh finance and complicated things easy like Athena has made basis trading easy and the other part of this is making things decentralized so like um for instance Morpho has in a way made uh risk management and curation like they've decentralized it more away from the the DAO or the protocol itself to other curators and that has you know provide creative value and Morpho has like like a billion dollar market cap or something so all these things are things that we need and also are profitable to build yeah so that's it uh my name is Danger uh today in D5 is a D5 news media we do research and yeah so yeah uh any questions uh speaking of Athena, I just want to learn more about uh how what's the what's the idea of uh the mitigation of risk for the centralized exchanges? You mentioned by bit hack, right? How is that possible for Athena to mitigate that risk when it's doing the basis trade?

Yeah. So that's super cool and I think this is also a point where like it could be good to build a DeFi project around it but they used a co a custodian called copper. So copper held all their money and they limited so all their money was with copper not with buy bit uh for their exposure and then uh copper my understanding is that they would settle the P&L with Athena. So they would they wouldn't uh deposit all the money on a on a buy bit and then uh trade with it. They would just uh do the account settlement of the trades and then they would uh deal with the unrealized P&L.

So it's a really cool system which I think actually DeFi projects could probably also do. So someone should make a project around this. Uh does it make the centralized risk on the copper side? Yeah, I'm actually really really impressed. They're either taking on huge risk or they have extremely good risk management.

I I don't know what the details of how they do it beyond what I said is, but like yeah, they seem to I guess they have a really close relationship with the exchange. They have really good custodial um setup and then they uh they just are able to have a contract where they only settle the the P&L. So, got it. Uh how how's how's the transparency on that front at the moment? Uh you mean for in the transparency regarding the the funds uh on copper side and on each exchanges sides?

I mean is there do Athena offer any kind of transparency? Oh yeah that's a really good question. Um like they Athena has really good onchain transparency for the custodian aspect. I think a little bit less they talk about in their documents but I don't think they have uh like transparent uh dashboards for that. No.

Got it. Thank you. Oh, one more. Hey, here. Uh, I'm just interested why is Athena not doing uh the hedging part onchain?

Is it because the volume onchain is not enough for them to do the volume that they want to? Hedging onchain. Oh, yes. Yes, basically that I mean they have like8 billion dollars of uh like supply. So I I just don't think I don't think there's any uh onchain exchange that that does that.

Yeah. So I think that's definitely one reason. And I think also the custodians they use probably can't handle uh dexes cuz there's not really like a really good c onchain custodial solutions yet as well. So okay thanks. Okay.

So, thank you, Danger. And let's give him a round of applause. Thank you. [Music]