Decentralization is a journey and a spectrum. That spectrum must be defined for DeFi’s collective clarity, direction, and objectives.
Presenting: the RabbitX Decentralization Ranking System (RDRS).
If you ask 10 different crypto people what decentralization means, you’ll get 14 different answers. Standardizing our approach is critical to help spread adoption and understanding of our projects and their infrastructure. That is what RDRS wants to accomplish.
We need visibility where the fulcrums of centralization are and how they can impact users. We can best understand where a DEX is in its process using a quantifiable scoring metric. It must measure elements that are generally accepted as relevant to decentralization.
Not all applications have to be perfectly decentralized, in fact some may be clear that the team has built the product with the intention of retaining control. This is tantamount to an onchain business; which is perfectly fine, they just must be transparent about it.
On building infrastructure for this new financial paradigm:
It’s unreasonable to expect projects to be completely decentralized at their genesis, or even frankly at the stage we’re collectively at now. Most projects are not even mostly decentralized yet, let alone fully. I don't think this is due to lack of intention.
We’re only about 3 years removed from DeFi summer 2020. This is a process. 3 years feels like 9 lifetimes in this space, but in context it’s still nascent. DeFi infrastructure is really only starting to scale now (yes, you are still early).
Users need to be aware there'll be concentration on processes at the onset, just like for any project. RDRS will help identify it. If there's a roadmap, it should lead to decentralization, which btw is very much in our roadmap.
Think of this as the GAAP/IFRS of decentralization.
There are agreed-upon accounting standards that must be adhered to for a company’s practices to be deemed legitimate and its balance sheet, income statement, etc. to be considered coherent and structured. Without this understanding of what constitutes earnings, accounts receivable, cash flow, etc. company accounting would be a set of opaque, unintelligible metrics for investors.
If you're trying to measure something, it must be consistent. A ruler that stretches is a bad ruler.
Without GAAP, you’d need to reorient yourself and learn the rules for each company’s accounting to get a gist of what they’re reporting. Business could not work this way. DeFi cannot work this way.
The thinking that went into this system is just a hint of the reflection and consideration that goes into our architecture and planning at RabbitX. RDRS will be an iterative process that will grow as DeFi’s collective tech and adoption does. Some things we thought important now may not be as relevant in hindsight.
We should be open to evolving these standards as use cases, security, user patterns, etc. emerge and evolve. With that being said, here’s the first iteration of RDRS for DEXs: access RDRS here.
Feedback, critique, and thoughts very welcome. This is a tool for everyone.
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