Decentralized finance (DeFi) has experienced parabolic growth in 2020 going from ~$1B to over $20B. There were a lot of factors that contributed to this growth like Compound's liquidity mining, Yearn's yield farming, Uniswap's airdrop, and a whole host of fair launches.
Although DeFi has grown nearly 20x, there have been plenty of growing pains. Exploits and hacks have claimed over $154M in 2020 alone! It's great that DeFi has the promise of being trustless, inclusive, and allowing everyone to participate in a new financial paradigm. However, we still need to be cognizant of the very real risks inherent in these systems.
There has been plenty of coverage on crypto twitter, discord, and telegram of the variety of exploits, hacks and rug pulls. However, the problem to date has been a lack of dedicated monitoring tools. The data processing complexity and engineering effort required to build such a toolset has left the community utilizing hastily built alternatives cobbled together with The Graph, Dune, Blocknative, etc.
Layer 2 solutions going live and promising mainstream adoption will only make the need for a dedicated monitoring service more obvious due to the massive influx of funds and transactions. We've already started to see DeFi apps utilizing L2 solutions such as Optimism, Starkware, and Loopring.
The data complexity and processing power needed to monitor 10x the amount of data is non-trivial and something internal tools won't be able to support easily.
Additionally major financial institutions are investing capital and utilizing the technology built by DeFi, see the recent US banking regular's guidance.
Now more than ever, the DeFi ecosystem needs an active monitoring service for the variety of protocols & L2 solutions to bring clarity and visibility to the ecosystem. A monitoring tool that watches the various liquidity pools, yield farms, decentralized exchanges, and other platforms to alert interested parties about nefarious activities or important events. Additionally, a tool that provides infrastructure such as webhooks so others can build on top of it.
At SimpleID, we're building monitoring service to help bring clarity to the DeFi ecosystem. The two major product users we're targeting: protocols & community. We've listed a few use cases for each user type below, and are sure there's many more possibilities.
Protocols, Developers, Investors
Live monitoring & easy to use real-time subscriptions for integrations
Monitoring for potential exploits & hacks of protocol funds
Webhooks to help developers build plugins & integrations
Alerts via notifications & emails for critical smart contract event changes
Community, Exchanges, Insurers
In-depth data visualizations to understand where and how funds are flowing
Understand protocol-community or product-market fit for features
Exchanges analyze protocols to identify bad behaviors such as wash trading
Smarter risk assessment for insurers to write protection for stakeholders