Facilitating Defi’s Next Stage of Evolution: Consolidation
Infrastructure for a community oriented merger and acquisition process.
Natural selection is the “engine that drives evolution”. The Darwinian concept describes the process in which various populations of living organisms adapt and change with their environments. Because populations are naturally variable, some members have traits that make them better suited to their environment than others. Ultimately, though, it is the organisms with favorable traits that are most likely to survive and reproduce. Over time, this process promotes advantageous traits which are transmitted through generations while weaker, undesirable ones are weeded out. Simply put, organisms are forced to adapt to their environment or they will die out.
In our eyes, the cyclical (or “evolutionary”) nature of cryptocurrencies and blockchain technologies is no different than that of biology. Crypto markets are quickly maturing, which means that weaker projects will no longer be able to rely on historically frothy monetary conditions and rampant speculation for survival. Going forward, these projects will instead be forced to adapt to the tightening market conditions with innovation and creativity, otherwise they will not survive.
These circumstances, though, beg the question: how will the countless number of defi projects be able to continually innovate and build as resources deteriorate and the space continues its rapid evolution? We think that for most projects, adapting may actually mean collaborating and joining forces with one another through a novel, cryptographic M&A process.
The Next Stage of Evolution for Defi
With Bounce, we introduced the first and “go-to”, decentralized auction platform in 2020. The ebay-esque marketplace facilitated the birth of many “species”, or projects, within crypto. In our eyes, this bootstrapping process was an important first step for the defi ecosystem as a whole. Since we started Bounce, however, countless new participants have entered, and subsequently diluted, the market. In order for the myriad of projects to survive, they must adapt and consolidate in a process of natural selection; crypto is moving into its next stage of evolution and needs the appropriate infrastructure to facilitate this important transition. Far too many projects and communities are abandoned because their founding team gives up, succumbing to the increasingly difficult natural selection process within defi. Currently, there is no medium for projects to undergo the required, later stage growth or “adaptation” process. In an effort to help facilitate defi’s inevitable late stage transition, we are building infrastructure for projects to merge and acquire one another; or, in a biological sense, to make the appropriate adaptations for survival.
For crypto projects, we see the natural selection process as one that will revolve around mergers and acquisitions, similar to how companies were consolidated throughout the dotcom era and are acquired in the tech industry today. However, natural selection in crypto has clear, unique distinctions from the realms of traditional business and biology. The main reason these differences exist is because many projects and tokens are community oriented. As a result, the merger and acquisition process may not actually be driven by a project’s team or its founders. Instead, it can happen under the surface, within a community of holders and supporters. This dynamic is actually one that is beneficial for token holders because these are the participants who are not only invested into the future of these projects but are also the ones who wield the necessary governance power for initiating these processes. It is clear: mergers and acquisitions between projects will enable the consolidation of utility and ultimately support the necessary adaptations to survive in today’s maturing, overly diluted crypto market.