Most financial systems operate as zero-sum games, even on-chain; lending protocols are a great alternative to traditional finance, but they still pit customers against each other.
Even when protocols operate with complete transparency, it is still common for them to operate as zero-sum protocols. Projects in the DeFi space often require consistent growth in order to operate as intended, such as Terra Luna which imploded when users attempted to redeem UST for their Luna, causing a bank run. While many were able to rake in profits during the hay day of Luna, those profits came at the expense of later users.
Though they offer users more direct control over their finances than previous systems, the typical model of lending protocols still leaves something to be desired. DeFi was meant to unshackle participants from the often predatory schemes of traditional finance, so while lending protocols are a tremendous step up, there’s still much to be done to improve the experience for lenders and borrowers alike. The advent of positive-sum DeFi bridges that gap.
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