We are announcing a new direction for Market.xyz as we focus on building a more secure and sustainable Defi protocol. This is a strategic pivot and we will be transitioning away and sunsetting our current user interface, setting all pools to withdraw-only mode, effective immediately.
This decision was reached after thorough discussions with our team, advisors, and community members. We remain deeply committed to the core principles of decentralized finance, which include transparency, fairness, and collaboration.
We have come to the conclusion that Market’s isolated market infrastructure, as well as much of the larger DeFi ecosystem, remains “Optimistic” in nature, and the dynamic nature of the markets means that risk has to be actively managed. This inadvertently poses an impediment to achieving true immutability in smart contracts.
The prevailing infrastructure heavily rests upon governance, multisigs, and oracles, embracing an Optimistic viewpoint that these elements will operate fairly and effectively, devoid of any exploitative or malicious interferences.
Despite significant improvements, oracle infrastructure for price feeds still faces challenges with oracle exploits, and the involvement of active governance not only generates operational burden on the wider community but also inadvertently accords disproportionate power to the custodians of the multisig. Consequently, governance necessitates the active management of pool parameters, creates the need for continuous involvement from pool administrators to oversee and regulate the pools efficiently.
Recognizing these critical shortcomings, we firmly believe that a paradigm shift is required to truly scale the DeFi landscape effectively. Instead, we need to establish a new foundation premised upon a set of core principles designed to address the inherent pitfalls of the current approach:
- Embracing Determinism over Optimism: As previously outlined, the prevailing infrastructure of the DeFi ecosystem is inherently characterized by its Optimistic nature. We need to move towards a Deterministic approach that empowers stakeholders with the ability to accurately anticipate a well-defined and limited spectrum of potential outcomes for their positions. Consequently, this overhaul would not only enhance the predictability and stability of the system but also reinforce the trust and confidence of its user base in the long run.
- Minimising operational overheads: The primary objective of users should be centered around maximising gains and adeptly managing personal risk, rather than being encumbered by the complexities of participating in governance. As it stands, protocol contributors are required to maintain constant vigilance and be readily available to respond to emergency votes in the face of rapid market fluctuations or potential exploits. This reactive strategy is not only insufficient in terms of risk mitigation — due to the time-sensitive nature of emergency governance votes — but also burdens the community with unnecessary operational demands.
- Minimising path dependency: The outcomes for current traders, yield farmers & borrowers are heavily path dependent. This makes the participants extremely vulnerable as the young ecosystem, especially with lower volumes, remains vulnerable to high volatility & short-term market manipulations. This makes it difficult for users to take medium to long-term bets and act on their thesis.
- Rethinking our approach towards composability: While the current consensus within the DeFi domain revolves around pursuing maximum composability, our experience has demonstrated that this approach may not invariably yield positive outcomes. In fact, heightened composability frequently leads to increased risk exposure, as the system’s outward orientation fosters connections with external elements that carry unknown vulnerabilities, potentially resulting in security breaches and significant financial losses.
A Transformative Journey
In September 2021, Market.xyz embarked on a journey with the objective of democratizing the landscape of crypto borrowing and lending through isolated markets, starting with Polygon. Over the course of this path, the protocol successfully ventured into the Fantom and Avalanche ecosystems, hosting 32 pools comprising 265 diverse assets, achieved a peak north of $250 million in Total Value Locked (TVL), and $1B+ in transaction volume — all this, without relying on token launches or liquidity mining incentives.
As we pivot, we continue to prioritize the interests of our users and the integrity of the crypto space. This transition provides us the opportunity to reassess the direction of decentralized finance and concentrate our efforts on developing more sustainable, ethical, and inclusive solutions. We are actively pursuing research and development endeavors that resonate with the essence of our mission and look forward to sharing them with the DeFi community soon!
Seamless Support During the Transition
The dApp frontend will remain live for the next six months, and our community managers will be accessible via Discord to assist you through this transition. We encourage all the depositors to withdraw their funds at the earliest. Rest assured, the smart contracts will continue to function as designed, which can be verified through on-chain analytics.
We are grateful for your ongoing support and remain optimistic about the future of DeFi. Our commitment to building a trustless financial system that is accessible to all and fosters an inclusive environment for users from all walks of life remains unwavering.
Embracing the future of DeFi together,
— The Market Team
