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How can you prevent DeFi projects from being cloned and exterminated?

Ian Lee, crypto startup investor and CEO of IDEO, has revealed this DeFi protocols can be prevented from being cloned and made illiquid by improving design and governance from the start.

When SushiSwap forked from Uniswap on Friday August 28th, it suggested the start of a wave of similarly cloned DeFi protocols due to their open source nature. Projects that require years of research and development, go through multiple security reviews, and attract millions in seed capital can easily be cloned with little or no resources..

Lee said that on a blog about Substack Improving the design and governance of tokenomics makes the protocol more valuable. He said that too Integration with existing DeFi platforms and pre-planning updates to introduce better rewards and features Then, deploying them right when a branch appears can make existing logs more resilient in the future.

How can you prevent DeFi projects from being cloned and exterminated?
How can you prevent DeFi projects from being cloned and exterminated?

Said Today’s high yield farmers want better rewards, a native mark that increases in value over time, and improved logs that keeps the platform ahead of the competition. Give that to them and you can help ensure the longevity of your project.

This is timely advice in light of this SushiSwap managed to obtain over $ 1 billion in crypto collateral from Uniswap in just five days. He achieved it through Offer better rewards to support farmersThis in this case was owned by the protocol by SUSHI government tokens, the price of which has also increased.

Uniswap was vulnerable because it doesn’t have its own government token yet and only offers its liquidity providers a 0.3% share of the trading rate. According to the Sushiboard analysis platform, more than 73% of the TVL (Total Locked Value) has now been transferred from Uniswap to SushiSwap.

Another key difference is that Uniswap has raised a significant amount of capital from VCs in one funding round, while SushiSwap is offering the rewards to its community owners. The VC funding model may need to be revised for future DeFi protocols.

But How should you react if you’re on the core team for a DeFi protocol and see someone trying to take over your patch (or patch)? Vance Spencer, co-founder of Framework Ventures, conducted a survey on Twitter in which he gave three options for the case of a bifurcated protocol.

You see someone trying to share your log

You should…

-Adopt it

-Fight him

-Complain

Most of the answers were more than 70% at the time of this writing, said he would accept it instead of fighting or complaining about it. Robert Leshner, CEO of Compound Finance, agreed with the sentiment, adding:

“”Try to help them make it safe. Nobody wants a $ 100 million DeFi disaster, and they’re giving up the old stuff anyway. “

As DeFi evolves, Fork logs will be more common, so reluctant acceptance might be the only answer.

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