30s Summary

The Lindy Effect, a concept that suggests the longer a product has existed, the longer it will continue to persist, is applicable to crypto platforms. Consistent, long-standing platforms like Uniswap v1 and v2 are considered reliable. However, frequently updated platforms like Aave and Compound require reassessment after each update. Even with a good reputation and strong security, problems can sometimes be overlooked. Therefore, prudent users should consider both the platform’s technical structure and its reputation to determine its trustworthiness.

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Crypto was made to remove the need for trust. However, a lot of crypto users still choose platforms based on how long they’ve been around and how much they trust them. This is where the Lindy Effect comes in, which is a popular topic in the DeFi world. But it’s often used in different ways, sometimes referring to the platform itself, and other times to the system behind it. Let’s break down what this all means and what you should keep in mind while checking out different platforms.

So, what is the Lindy Effect? It’s a theory stating that the longer a good or concept has existed, the longer it’s expected to last. This can be applied to anything that is unlikely to degrade over time, like ideas, technology, even cultural phenomena. The idea is that if something has stood the test of time, it’s probably going to keep on existing.

This theory can also apply to DeFi platforms, which are like nonperishable goods. Basically, the longer a platform has been running without any major hiccups, the more likely it will continue to be secure and reliable. For example, Uniswap v1 and v2 are two platforms that haven’t had any significant issues since they were launched. People using them expect that they’ll continue to work smoothly with little chance of any problems.

This all sounds straightforward, but it’s not that simple when talking about platforms that are frequently updated, like Aave, Compound, or Lido. Every time these platforms are updated, they can become a new entity, and users should technically reassess whether they still trust them. But, well, most people don’t and still see them as the same platform. This bias can lead to potential issues if unexpected bugs or vulnerabilities are introduced with these updates.

Now, while the Lindy Effect for a platform might reset every time it’s changed or updated, there’s also a brand-level Lindy Effect. This lasts as long as an attack hasn’t been made against the platform. A platform’s brand builds a reputation for safety and reliability over time, based on its performance, security measures, and the expertise of their team.

However, just because a brand has a good reputation, doesn’t mean it’s completely risk-free. Issues can be brushed under the rug and potential risks can sometimes be hidden.

In summary, while only platforms that don’t get updated can truly follow the Lindy Effect, updated ones can still be beneficial, especially if they have a strong and trusted brand. However, if you’re an advanced user, it’s always a good idea to consider both the technical structure of the platform, and its brand reputation. This way you can make an educated decision about who deserves your trust. As Nicholas Nassim Taleb (gy who spread the concept of the Lindy Effect) wrote: “the only effective judge of things is time.”

Source: Cointelegraph