If you look at the current DeFi ecosystem from a distance, you'll realize a rather awkward reality:
There are many protocols, many products, and strong functionalities, but there are very few truly 'usable' financial infrastructures.
Wallets operate independently, and yield protocols calculate separately,
PayFi, RWA, Neobank, and DeFai each tell their own stories,
But they lack a layer in between.
It's neither the application layer nor the underlying chain,
But rather a layer—understanding finance, being able to combine, and being callable repeatedly.
Lorenzo's real strength lies here.
1. The biggest problem with DeFi has never been 'insufficient yields.'
Many people think the pain points of DeFi are poor revenue, insufficient liquidity, and users not understanding.
But the real question is:
Financial logic is hardcoded into a single protocol, making it non-reusable.
In the traditional financial world:
A strategy can be called by different products.
A risk model can serve multiple business lines.
A revenue engine can be packaged by countless front ends.
And in the DeFi world:
Each protocol is an island.
Strategies and products are tightly bound together.
If you want to reuse it, you can only rewrite it.
This leads to one result:
Infrastructure can never be piled up.
2. The Financial Abstraction Layer (FAL) is the answer given by Lorenzo.
The Financial Abstraction Layer proposed by Lorenzo essentially has only one sentence:
Extract 'financial capabilities' from specific products and turn them into underlying modules that everyone can call.
It sounds simple, but this step is extremely difficult.
Because this means you need to:
Clarify the strategy logic of CeFi
Modularize risk structure
Standardize the revenue calculation.
Then turn all of this into composable components on-chain.
The vast majority of DeFi projects do not do this because they are too slow, too dirty, and too unsexy.
And Lorenzo just happened to focus on the hardest bone to chew.
3. What does 'financial abstraction' mean? First, look at a very intuitive example.
Imagine such a scenario:
You are using a regular wallet,
But there is a 'stable income' button in the wallet.
You do not need to know:
Which chain the strategy runs on
Which DeFi protocols have been used
Is there RWA
How risk exposure is distributed
You only care about one thing:
This is a set of long-term predictable revenue logic.
And behind this button, it does not call a single protocol,
But it is a whole set of financial module combinations provided by Lorenzo.
This is the power of the Financial Abstraction Layer.
4. What Lorenzo is building is not a product, but a 'standard library'.
From the perspective of underlying logic, what Lorenzo is doing is more like:
Create a financial SDK for Web3.
It breaks down complex financial capabilities into several key components:
Strategy module
Risk module
Settlement module
Report and audit modules
These modules are not bound to the front end, nor to a specific narrative.
Wallets can be used,
PayFi can be used,
Neobank can use it,
RWA platform can be used,
Even future AI financial agents can call directly.
Once this standard is formed, Lorenzo's position will no longer be 'some revenue protocol'.
But it is one of the foundations of all financial products.
5. This is fundamentally different from traditional financial intermediaries.
Some people will say:
'Isn't this just moving the banking system onto the chain?'
Precisely not.
The characteristics of traditional financial intermediaries are:
Black box operation
Trust is based on licenses.
Users can only accept the results.
And Lorenzo's Financial Abstraction Layer is:
Fully verifiable on-chain
Rules written into contracts
Behavior can be audited.
Risk exposure is transparent.
Traditional finance is 'you trust me',
Lorenzo is 'what you can see'.
This is not a slogan for decentralization, but a structural difference.
6. Why this idea, once it runs through, will be very scary.
Because once financial capabilities are abstracted into underlying modules, three things will happen:
1️⃣ The innovation cost of financial products has dropped sharply.
There is no need to redesign the revenue logic, just recombine the modules.
2️⃣ New applications no longer build financial systems from scratch.
Directly connect to Lorenzo, focusing on user experience.
3️⃣ Lorenzo will become an 'invisible but irreplaceable' existence.
Just like today, no one cares about TCP/IP, but no one can live without it.
Such projects often do not look lively in the early stages.
But once the ecosystem is laid out, it is hard to bypass.
7. Why I am mindlessly optimistic about Lorenzo's FAL route.
The reason is simple:
It addresses structural problems, not short-term narratives.
It stands in the position of 'being used by everyone', rather than 'competing for users'.
Its value exponentially amplifies as the number of users increases.
And more critically:
What it does is the layer that Web3 must eventually supplement.
You can do it late, but you cannot avoid doing it forever.
The last sentence
If you still see Lorenzo as a 'revenue protocol',
Then you underestimated it.
What it truly wants to do is make Web3 finance like software:
Modularization
Reusable
Composable
Verifiable
As future financial applications increase,
You will find that,
What is truly valuable is never the front end, but that invisible layer of abstraction.
And Lorenzo is standing on that layer.
