Problem Statement

• DeFi is complex, and risk-reward ratios are often unclear.

• By providing liquidity on Automated Market Makers (AMMs), you can earn additional yield on your crypto assets. However, this task is challenging due to the plethora of available AMMs.

• Determining the safest and most effective AMM is difficult.

• Identifying the best pools and assets for liquidity provision is also a concern.

• Once you find a suitable AMM and assets for liquidity, navigating through various options and settings can be confusing.

• Assessing the safety and security of different blockchains is another hurdle.

• It's challenging to identify which blockchain offers the best volume for your liquidity provision.

• Even if you understand all these aspects, issues arise again when considering Liquid Staking Derivatives (LSDs), similar to the aforementioned points.

For this Hackathon test case, we're examining Liquidity Staking Derivatives (LSDs) and their associated challenges. One can stake Ethereum (ETH), but doing so requires 32 ETH, a server running 24/7, and technical expertise in using a Command Line Interface (CLI). LSDs aim to streamline this process: a user can simply swap their ETH for a staked form, which can then be utilized within the DeFi ecosystem. However, there are now over 50 types of LSDs, showcasing both the innovation and chaos inherent in DeFi's rapid evolution.

DeFi's complexity arises from its decentralized architecture and interconnected protocols. Diligent manual oversight is necessary to comprehend fluctuating risk-reward ratios, making the system both labor-intensive and susceptible to errors. Adaptation is a constant requirement, emphasizing DeFi's multi-dimensional nature.

While services like BlockFi and Celsius package DeFi principles into centralized frameworks, they dilute the true essence of decentralized finance. Even DeFi-native products such as OETH and Sommelier incorporate elements of centralization and unclear risk factors, undermining the core concept of decentralization. This discrepancy hampers both adoption and trust, further muddling what it means to be truly decentralized.