Problems in Web3 & DeFi

In Web3, DeFi, and memecoin spaces, what should be a sophisticated financial network often resembles a digital game of hot potatoes. Turtle is dedicated to tackling obstacles that impede sustainable growth and compromise Web3's future. Key issues include:

Protocol Liquidity Demand: Demand for liquidity surpasses market capacity, hindering new protocols from accessing sufficient liquidity.

Inefficient Market Structures: Inefficient structures and lack of access to off-chain deals lead to wide spreads and illiquid markets.

Web3 Security: Rug pulls, smart contract breaches and due diligence costs makes it risky for professional LPs to try out new protocols, causing them to focus only on established Dapps. This selective approach restricts liquidity in Web3. Additionally, insufficient investment in security exposes liquidity providers (LPs) to high levels of counterparty risk, resulting in frequent and underreported hacks.

Risk-Adjusted Returns: LPs are exposed to unacceptable levels of risk, hindering ecosystem adoption and growth. Low liquidity utilization and high counterparty risks discourage potential LPs, slowing the organic expansion of DeFi, resulting in negative real yields.

Liquidity and User Fragmentation: User acquisition and protocol onboarding face friction, highlighting the need for streamlined solutions to enhance liquidity accessibility and reduce fragmentation.

Lack of Transparency: The opacity surrounding backroom VC and liquidity deals and protocol operations undermines trust. Emerging protocols face a trust deficit and struggle to establish credibility, which increases their cost of capital, hinders their ability to attract and retain liquidity, and stifles innovation.

User Monetization: Most protocols and infrastructure projects struggle to monetize their user activities.

Inefficient Emission Expenditure: Misaligned incentives lead to continuous token dumping, deterring longer term liquidity relationships.

Forkable value proposition: A lack of unforkable value propositions makes protocols easy to vampire attack, causing liquidity and mercenary capital to bounce from one protocol to another, preventing the formation of mature protocols across the Web3 stack.

All these problems trigger a negative flywheel effect, where decreased LP involvement leads to less liquidity, which in turn results in a deteriorating user experience (UX) and reduced user activity