Take Curve and Sushi as examples to talk about DeFi pedestal theory

DeFi protocols focus too much on value capture and not enough on value creation. As an industry, we've taken the concept of money Lego too seriously. I've been a (unproven) believer in fat protocol theory since I got into the field, but as the industry has grown, I think I've started to look at it from a different angle.

While I love Sushi, I think their protocol has an inherent flaw that gives companies like Curve the upper hand because they focus on value capture rather than value creation. When I look at protocols like Sushi, and more specifically, xSushi, it's clear that what's missing from their model is that their network incentives are in a closed loop in their ecosystem, and that's in line with the "money Lego" narrative on the contrary. It limits its own success and also causes its own failure.

Curve has unknowingly become the main application in this article. Whether this is intentional or not, it doesn't really matter. The greatest innovations in finance are often done in error, or at least as an indirect result of pragmatic logic.

DeFi

Curve’s network ownership is denoted by $CRV, while its governance derivative, veCRV, solves the same problem as Sushi’s xSUSHI. veCRV has a second layer of complexity tied to it, which not only helps drive this paper, but is where most of my efforts in this weird financial subdivision go. This complication is the creation of value in the desire for governance, independent of any value capture at the "application" or "protocol" layer. The concept of governance desirability refers to the value that network ownership creates across the ecosystem.