DeFi’s liquidity problems are a direct reflection of the concentration of funds powering the ecosystem, which means that there aren't a lot of little guys contributing to the seemingly huge volumes and contrary to popular opinions, this is not necessarily a UX or UI flaw.
If we solve the flaws of limited education and the non-friendliness of “DeFi products” — what volumes we will attract will still be limited to a small percentage of the world.
This is because the understanding of “DeFi” — to developers at least(evident in what constantly gets built) — is investment products and services and that is wrong.
There aren't many(if any) builders out there that think in the direction of building channels to allow active value flow, on an extensive level without getting into an “investment contract” being central or fundamental to the system.
If you think about it, as an ecosystem, when we talk about decentralized finance and all we can show for it is a decentralized exchange or swap protocol, with yield farming/liquidity mining investment products(contracts) and lending protocols trapping borrowers into over-collateralized loan contracts where liquidation is almost certain, given the volatility of crypto, we, essentially, are a complete joke.
Even the most basic service, which is dexes(decentralized swaps) is not a consumer-facing product.
Shocker?
Let me explain that quickly.
How many people do you meet daily, in the real world that says: I wish I could find a bank to swap my currencies and assets around, actively because that's such a common, every day practice?
It's very likely that the answer to that question is zero(not a lot), because if anyone is looking for something even close to what's described above, they aren't looking towards the direction of a regular bank, so they, essentially, are moving in the direction of investments, which is an industry with a vast number of options depending on what assets we are talking about.
A decentralized exchange, or swap, essentially, is a product or service for investors, not regular people. Regular people make money, save money and spend money, they don't “swap money” around.
A Labor Market, onchain, unlocks trillions in economic value
A labor market is a place or system where workers offer their skills, knowledge, and time in exchange for wages, and employers seek to hire workers to fill jobs. It's where demand for labor (by employers) and supply of labor (by workers) meet. — GPT
Generally, when reporting on economic numbers, there's often the reference of sectors like finance, manufacturing and retail trade as being major contributors to a country's GDP, which is essentially a reflection of economic value created within the nation.
What is not often explicitly acknowledged is that the labor market is central to everything else. Without it, let's just say there's essentially nothing. If there aren't workers and employers, how then can any value be created?
The labor market essentially becomes fundamental to how well an economy performs, this is why employment is a crucial factor in stabilizing economies.
Think about every company, institution or organization that exists and think about how much they spend paying their employees, now think about that value moving through the blockchain.
How would this happen?
First off, during the initial stage of building something like this on the blockchain, it's expected to be mostly utilized by freelancers and employers looking to hire for one-off contracts, something like Fiverr and Upwork.
The upside however is that this would be greatly cheaper for both freelancers and employers and it would be accessible to everyone, globally. The borderless nature of crypto and blockchain makes a labor market onchain a great force to attract top talents and skills.
With a pool of people with varying skill sets that are verifiable onchain through tokenized proof of work, essentially contributing to individual reputation in the job market, we have a value network that can actively generate income for regular people that become free flowing liquidity onchain.
Certainly, something like this has to be built to be resistant to centralization. This means that it has to be governed by stakes or representatives elected by stake. The significance of this is that this network of representatives will work as validators would work to secure a network, only that their job would be manual and not handled by automated software.
Think about disputes that may occur in an ongoing job contract, the representatives will be responsible for resolving this and ensuring that the appropriate parties are compensated. This also means that value flowing through the system would be locked by smart contracts until employers sign-off on a job completion and satisfaction, otherwise the representatives will review the situation and vote on the appropriate solution. Every process becomes a record onchain that stacks up as a reputation score for not just freelancers but also employers.
This is a $9 - $12 billion freelance industry we are looking at and would be a unique source of revenue and liquidity for the cryptocurrency ecosystem.
If we move past building for the freelance market, we would be looking at having a deeply customizable solution for individual companies, that they simply plug into their organization, allowing individuals to apply for job roles and get paid autonomously through a smart contract. The benefit is that employers get access to onchain data(credentials and reputation) on all applying persons, and workers likewise can see the onchain operations of said organization.
With more and more value from the labor market flowing through the blockchain, we essentially unlock trillions in liquidity generating revenue for the ecosystem as it flows from employers to employees and potentially to the products and service markets, also built onchain, essentially benefiting from the large economic value that is generated by consumer spending.
This is how we put it all onchain and capture the most liquidity out there.