Google has made bank off search.
Over the last 30 years, it is hard to wrap our heads around how much money Google made from search. It is certainly into the hundreds of billions, if not trillions. To say this was a "money printer" is an understatement.
Crypto projects have failed to follow this model. What search provided Google was a steady flow of income, with little risk. Due to its dominance in the field, the money was almost certain. This allowed the company to move into other areas, with mixed results over the years.
That said, Gmail and YouTube are two sure winners for the company.
Vitalik Buterin feels Ethereum should think in the same manner.
In this article I discuss how his views on low-risk DeFi and how that could become the epicenter for Ethereum's revenue model.
Source
Vitalik: Low-Risk DeFi "Search" For Ethereum
For a couple years I stated how crypto is missing the boat. The focus upon speculation, at all levels, is not consistent with the financial world. For a period of about a year, I wrote about Hive bonds, an idea centered on forming high quality collateral.
This is not exciting stuff as compared to the price of Bitcoin going up (or down) 10% in a few minutes. It is nothing when looking at a meme coin doing a 10,000X in a few days.
What it does, however, is form the basis for a financial system. It is something that was massively overlooked by the crypto world.
Vitalik is focusing upon back to basics finance. He understands the majority of the financial world is not speculation. Instead, low-risk products dominate. If we look at the trillions just in US bank deposits, that tells us where many put their money. Bond markets are always larger than equities. Instruments that return yield such as certificates of deposits are extremely popular.
These are low risk financial assets which appeal to the masses.
Vitalik is looking to move Ethereum in the direction of depending upon this as opposed to fees generated by meme coins and other fly-by-night crypto assets.
Following Google
Ethereum co-founder Vitalik Buterin said revenue from low-risk decentralized finance protocols could give the network economic stability — much like Google Search supports Google — while letting nonfinancial apps uphold Ethereum’s cultural values.
There is little doubt that Google achieved a great deal of stability. Many can point to the fact that, when it comes to its initial values, the company was misguided. The quest for more data, pushing into total surveillance, could be cited as the primary culprit.
Buterin feels that Ethereum can concentrate on consistent revenues, garnering stability, while pushing values such as sovereignty and decentralization. We will have to see if this is possible as larger players start to emerge.
Low-risk DeFi could address “important tensions” in the Ethereum community over whether apps that bring in enough revenue to economically sustain the ecosystem align with the cultural and ethical values that brought people to Ethereum in the first place, Buterin said in a blog post on Saturday.
This could be viewed as bottom up banking. What is it that most people utilize banks for? Answer this and then replicate it.
As mentioned, the products commercial banks sell do not focus upon 100x returns. Local branches sell simple products which provide an APR. This is low-risk finance.
Vitalik feels that pushing this concept, with the decentralization aspect added, places the network in better position. It will not be apt to have wild swings in revenue, as speculators move in and out of markets.
It would also eliminate the dependence upon "crazes" which tend to crop up every few years in crypto.
The former has been a combination of nonfungible tokens, memecoins, and speculative trading, while the nonfinancial and semifinancial apps that reflect Ethereum’s cultural values have either struggled to gain widespread adoption or haven’t generated enough fees, he said.
Consistency is something that doesn't get a lot of attention in the world of crypto but it is crucial to success. It is likely this extends to all of life. However, when focusing upon Ethereum, consistent revenue generation is crucial.
At times, the fees cover the cost of operations. However, when the craze ends, it is drought time for the network operators.
Buterin is offering up a solution he believes will cure this.
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Except that when you do transactions on eth it costs and you have to interact with a wallet. For crypto to do something similar it must be free and any wallets must be invisible to the user.
A mix of Autonomi and Nano.
Facts! There is a reason it’s not being done.
Instead, low-risk products dominate This has been why many are willing to heap millions in the bank for a 3-5% APR. It's not about quick price swings anyway. The crypto world also needs to look at this financial maturity
Your focus on making low risk DeFi the dependable base really clicks from an accountant’s view. Predictable fee flows and clear defualt controls create stbale cash that lets builders plan instead of chasing manias. Boring can be a profit center, the way search funded bets at Google, and that’s good FiNance even if it puts the hype on a diet.