What the heck is “scrutability” and why is it important for DeFi?
Scrutability means understandability. That is, the opposite of inscrutable — something obscured, incomprehensible, and impossible to understand. It’s not used often, but in crypto, it probably should be.
To quote Joe Lubin:
The trust foundation of the planet for millennia has been rooted in top-down command and control systems, which are…very appropriate in many situations, but have led to loss of trust in the system as society has gotten so complex that the rule systems are not really intelligible by most people who are subject to them.
Traditional financial systems are, in many ways, inscrutable. One of the reasons DeFi is growing exponentially is that it offers a scrutable alternative to traditional finance — that is, one where everyone involved in the system has fair access to information. So, as a result, when crypto systems become inscrutable — we have a problem.
And in fact, nobody is sure how much liquidity is on PancakeSwap right now.
We can make an educated guess — perhaps using the broadly available volume figures from PancakeSwap aggregators (around $1bn a day at the time of writing), but we can’t actually be sure. Because the figures aren’t available.
“But aren’t there data aggregators for BSC? Isn’t it a public blockchain?” Well, yes, it is. Let’s look at the native analytics site for Pancakeswap.
Via PancakeSwapInfo.
…What on Earth is going on?
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BSC was unremarkable at release — the latest in a long line of Ethereum-like networks that had been popping up and sliding down since 2017 without ever making much in the way of noise.
Of course, then came DeFi Summer. With DeFi Summer, came Uniswap. With Uniswap, came a million Uniswap clones — one of which was PancakeSwap, built on BSC, using BEP-20s instead of ERC-20s. PancakeSwap was also unremarkable at first, and while alive, it seemed to be going nowhere, and slowly.
This all changed with the dramatic increase in Ethereum’s transaction fees. It was no longer a platform suited to small, or efficient, speculators. PancakeSwap had found its moment; volumes and liquidity surged, and while Uniswap has just about kept ahead, there have been multiple days over the last few months where PancakeSwap has actually seen more volume.
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So why don’t we know how much liquidity is on there? Well, in short, transactions scaled, but their data feeds didn’t.
What’s happening here is this:
While BSC was able to provide more throughput than Ethereum, allowing Pancakeswap to scale rapidly in terms of transactions, it’s become inscrutable as a result. This is not some minor site that’s broken. This is — at least, was — the single biggest site for PancakeSwap data; it doesn’t work, and the desync is getting worse, not better. It’s a shade under 1.5 million blocks behind right now; a Reddit post from February 25th shows it as 1.2 million blocks behind.
Everyone likes to talk about scaling bandwidth and transactions, without taking scrutability and access to data into account. But when you forget, this is the result — and information is the lifeblood of all markets. If you are behind on information, you will fall prey to insiders that are not. You will be frontrun, shorted, manipulated — you will lose. It’s only a matter of time.
It doesn’t matter if you have access to markets if you don’t know what’s happening in them.
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For a moment, let’s think of blockchains in terms of three elements: security, speed and scrutability.
Why aren’t we building Solrise on Ethereum? Well, it certainly has security, and it has that scrutability, but it doesn’t have that speed; and, unless there is a mass exodus from Ethereum, it’s never going to get that back. It’s just not the right home for an app with the requirements of speed and efficiency that Solrise has.
Why aren’t we building Solrise on BSC? Because it has speed, but not scrutability. If the biggest firms in the crypto data space are working with a hand tied behind their back with regards to figuring out what, exactly, is going on in its biggest app, what chance do any of the rest of us have?
We’re building on Solana because it’s truly been built for the long term. As well as being built to scale in transactions, it’s built to scale in terms of scrutability. This has been a conscious concern since the early days of Solana. Solana understands that it’s not just enough to make things bigger. For high-performance blockchains, and any application worth building on those chains, transaction scalability is worthless without maintaining scrutability of those transactions. Few developers have really gotten a handle on that yet. Solana’s have since day 1.
Solrise exists because we think access to investment options should be fair — and that means eliminating asymmetry. Asymmetry of means, asymmetry of access, but also asymmetry of information. If the last decade of crypto has taught us nothing else, it’s that markets only work for the many over the few when those barriers are torn down wherever they stand. If we break down barriers in terms of transaction costs and speed but leave huge barriers in terms of access to information: What’s the point?
This is why our team previously built Solana Beach — now one of the key sources of public information on Solana — and why we’re now building Solrise. We think giving everyone — and we do mean everyone — fair, informed, and easy access to advanced DeFi and crypto products will allow DeFi to truly reach the next level and begin drastically disrupting the civilization we live in. When everyone can access returns previously restricted to advanced traders and farmers at the click of a button, the whole game changes.
