DeFi’s Rise to Shame: Its Problems and How to Fix Them

https://hackernoon.com/defis-rise-to-shame-its-problems-and-how-to-fix-them

by Wiligut45 • 4 years ago

22 35 4 years ago

The first step is acknowledging that “DeFi” really means “Deregulated Finance” right now.

chrisco2553• 4 years ago

It's a form of peer to peer finance. And you engage in "deregulated" financial activity every day. It's a basic human right.

beardyw• 4 years ago

This is about human protections more than rights. Otherwise we have learned nothing in the last few weeks.

hef198982• 4 years ago

Too lazy to look it up, but I am quite sure "deregulated finance" is mentioned nowhere in the UN charter of human rights.

DennisP• 4 years ago

Eh, no. Defi should continue to mean the sort of systems where failures like FTX can't happen. Uniswap for example has no admin functions; the only person who can move your funds is you.

jeroenhd2• 4 years ago

Decentralisation means more people get responsibilities and therefore are liable if something really bad happens. It doesn't mean regulations don't apply.

With the way Tornado Cash went down, I disagree that DeFi is "deregulated". The stakes are as high as ever for the people working on these projects. The people getting scammed by DeFi companies just don't have as much money to burn on lawyers and influence to take action when their deals turn out too good to be true.

woah• 4 years ago

Tornado cash never went down. It continues to operate.

willmadden4• 4 years ago

No, it is a technology that omits third parties and centralized institutions from financial transactions. If FTX had been a DeFi platform, the fraud committed wouldn't have been possible. Granted, DeFi can't do everything FTX used to do, yet.

Kwpolska• 4 years ago

Kill it with fire, nuke it from the orbit.

There, fixed.

dsimmons• 4 years ago

A journalist/marketer telling us how to fix things, cool.

"You just... easy!"

hrunt• 4 years ago

However, the technology does have quite a few advantages, provided that you’re investing in a legitimate project with a good & planned-out vision: 1. It’s a great and risk-free way of earning interest on your crypto holdings

This section is where I basically stopped reading. Anything that earns interest is not risk-free. Full stop. The whole point of earning interest is to reward the lender (and to be clear, "staking" is lending to the system) for the assumption of the risk that they may not get their money back. There are low-risk opportunities (usually accompanied by low interest). And in the case of staking a token, the staking comes with the implicit risk that the value of the token may decline substantially.

I see a lot of talk of "risk-free" opportunities in the DeFi movement, and that's why I stay away. It sounds too good to be true, and it is.

There are other issues in that article -- in particular, most DeFi APY calculations are variable and constantly changing -- but that one was the full-stop for me.

cuteboy19• 4 years ago

They never answer the simple question: where does the money come from?

Wiligut452• 4 years ago

You are watching on DeFi as a hype-risk, but it is not. It's more about technology, for example bridges, oracles, staking.

danaris2• 4 years ago

How To Fix Them:

1. Use A Bank

2. Admit That Cryptocurrency Only Solves Problems If You Like Crime

hi5eyes• 4 years ago

1. Use A Bank

citizens of china, lebanon, and history would like a word ser

2. Admit That Cryptocurrency Only Solves Problems If You Like Crime

if crime is the ability for the average internet user to custody their own money and to use it however they want without intermediary, then I would assume most enjoy crimes winkwink

a good tell if one is on the right side of history or not, is whether they support the free flow of capital and the rights of individuals to own their own money/capital.. or not ;)

danaris2• 4 years ago

If the cost of enabling some banking for a small subset of people in countries with terrible governments is also enabling absolutely massive fraud, rampant speculation, and a transfer of wealth from less-financially-literate people to wealthy hucksters, then I think we need to find a better way to help the people in those countries.

"Those people need help; this helps them; ergo, we must do this" is not sound logic.

Wiligut452• 4 years ago

1. You are from Africa, how will you use your money without banks, eh? 2. Not at all. In this logic, everyone who is a prisoner, 100% guilty?

lizknope• 4 years ago

Ban it.

Problem solved

joemazerino• 4 years ago

DeFi summer was, if anything, a ride of high-octane. Now that capital has learned that high APYs are unsustainable the notion of "Real Yield" [1] should help stabilize DeFi.

1 - https://cryptobriefing.com/real-yield-mania-hits-defi-five-p...

adam_arthur• 4 years ago

Can fix them easily by finding literally any valid use case. Maybe in another 10yrs

jbirer• 4 years ago

"Roman Wiligut @Wiligut

Growth hacker, tech enthusiast, journalist, futurist, writer, entrepreneur."

DeFi’s Rise to Shame: Its Problems and How to Fix Them

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