I recently read this article from Karthik Senthil and Lattice that makes the case for why middleware is required to power true crypto-consumer apps. Middleware is one of the least appealing investment angles in crypto from an ROI perspective, but are arguably one of the most important things in the industry to fund.

The ideas in this article align with my idea that DeFi protocols are liquidity infrastructure (not consumer apps), which I’ve touched on in Delphi Research’s DeFi thesis and on the Delphi Ventures podcast.

For crypto to really hit the scale of usage that we envision, I think we need to digest some hard truths. The first is that not everyone is going to care about decentralization and permissionless applications. The second is that, keeping the first point in mind, the core consumer-interaction layer requires some degree of centralization.

I talked about this in a recent Alpha Feed post. Essentially, you want maximal decentralization of all infrastructure layers (Ethereum and Arbitrum as core infra; Aave and Uniswap as liquidity infra). But the average consumer needs a much more simple, streamlined experience to be reeled in. And that requires some centralization. The fact that Binance and Coinbase boast a few orders of magnitude more users than Ethereum is proof enough that people value the UX that comes with centralized consumer apps.

The gist of it is that the industry genuinely has to build better products with better UX to cater to the masses.

The missing component between the current state of DeFi (people using the Uniswap front-end) and this depicted ideal end-state (people logging on to consumer-interfaces that use Uniswap liquidity on the backend) is the lack of proper middleware to facilitate this.

Admittedly, I don’t have a perfect idea of what kinds of middleware needs to be built to facilitate this future. But I do think this is going to be vital to seeing the industry mature over the coming decade.