#81: Stability gives a thing its essential character
Stable systems will future-proof decentralized finance
It is stability which gives a thing its essential character. The strength of an arch, the even burning of a flame, the growth of an animal, the balance of a forest ecology, the steady flow of a river, the economic security of a nation, the sanity of a human individual, the health of a society: these are all, in one way or another, concerned with stability.
— Christopher Alexander, Systems Generating Systems
In the world of crypto, particularly decentralized finance, we love to talk about innovation. We say things like, “the space moves so fast…every day there is something new to learn.”
An incredible amount of innovation happens in crypto every day. It’s fun and keeps us on our toes; but, something that we need to talk more about, to bring into the limelight, is the systems property of stability.
Systems theorist, Christopher Alexander, writes that stability is a holistic property. This means that stability is the result of the interaction of a systems many parts. For example:
A healthy economy is not any one thing — it is the interplay of consumption, spending, and inflation rates (amongst other parts).
A healthy person is not any one thing — it is a combination of the mind, the body, and the spirit.
When the different parts of a system are aligned — when there is balance and harmony — we say that the system is stable.
Decentralized finance systems need to be stable. Otherwise, they run the risk of collapse, like what happened to banks and to the economy during the 2008 financial crisis.
I want crypto to have a positive impact on the world and to help people gain financial independence.
I don’t want us to muck it up .
Can you imagine what would happen if crypto collapses? If applications with smart contracts that house millions of dollars, that are interconnected to one another, get abused or hacked?
We would re-create the 2008 financial collapse.
I really hope that this future doesn’t happen. It would be terrible. That is why it is extremely important to design decentralized finance systems that embody the holistic systems property of stability. By doing so, we can hopefully pre-empt failure and prevent a terrible future.
Innovation is really exciting — and necessary — but it must co-exist with stability because stable systems will future proof decentralized finance, making them long-lasting and sustainable beyond our years.
My intention is to use my writing to explore this really important topic: stability in decentralized finance. I want to understand how projects are thinking about stability and what kinds of safety measures they are implementing to prevent a potential crash.
Decentralized finance has immense world-changing potential, but we need to be thoughtful in what and how we build. A lot is on the line.