DeFi Is Not Dead

In the last few​ days I have‌ seen⁢ several articles about the death of Decentralized Finance (DeFi).

The recent troubles in DeFi were caused by a crypto founder and an exploit. This ‍crypto⁤ founder is also a terrible risk manager. Shortly thereafter, the founder of Curve Finance, a well-known automated marketplace (AMM), lent almost half of the protocol’s tokens​ to some DeFi lending institutions and lost almost everything after an unexpected but predictable DeFi exploit devalued ⁣the CRV.

Adam Blumberg,‍ certified financial planner and co-founder of Interaxis ⁢(a company that aims to bridge ⁢the gap between traditional finance and digital assets), is‍ also the lead educator. ⁤He is also an ⁣employee of AskFX.

⁣Daniel ⁣Kuhn wrote a wonderful commentary for AskFX claiming that⁣ DeFi is “dead inside.” JPMorgan’s report argued that the ⁤entire sector is in “shrinkage⁤ mode” or “standstill mode.”

DeFi is not dead, nor is the industry shrinking.

DeFi⁣ as‌ we knew it in the ‍summer of 2020 has certainly died and for that I am grateful. There has been too much talk⁢ about yield, bribery and liquidity. DeFi Summer was propelled by “yield​ farming” ⁤and eventually calmed ​down. A few decentralized platforms became market leaders, many​ of which adopted professional “white glove” services to‌ expand.

The sector ‍is not perfect. Daniel also noted‍ that we have concentrated too much power in too few hands.​ It sounds too familiar ⁤to me.

DeFi⁤ is a technology that has been financialized ‍to the ‍extreme. It’s not ideal for programmers to pose as financiers.

We ‌must not forget that we are still​ testing the ⁣technology. We don’t know how to use the⁢ technology. There will be mistakes.

In recent years we have‍ built robust systems that do not⁢ operate within the confines of traditional banks​ or corporations. The system is so ​secure that financial and corporate ​giants like Mastercard, Visa and Coca Cola are investing money and resources to maximize its efficiency.

DeFi will continue to be a challenge. DeFi will continue to grow, which makes it even more difficult.

DeFi’s early ⁢explorations and experiments show that ⁢it can evolve into ⁣a professional company and its market growth does not need​ to be driven by FOMO.

While many dream of full decentralization of ⁣all financial‍ systems, this‌ is unlikely to happen…at least not in our lifetime. The most difficult ⁤thing‍ to determine was⁣ the balance of power between the code running standalone and the people creating it.

Curve is just an example: You can’t take the human out of humans. But that’s

With DAO ⁤Summer​ 2021 we ⁣have continued down​ the path of decentralization. Anyone could join an autonomous ‍decentralized organization via a⁢ Discord ⁤connection, work for newly minted‍ tokens and have a voice in the‍ organization. The founders and investors will vote until they decide otherwise. Then we are back to the corporate hierarchy.

It’s not meant to be negative, but rather⁣ to show that it works, even if it doesn’t seem like it sometimes. DeFi ⁢will continue to be a challenge. DeFi will continue to grow, but it will only get harder as​ the real world catches up to DeFi and those not motivated ​enough to delve into the crypto rabbit hole.

⁤On‌ the one hand there are those who want to keep the current economic, financial and ⁤corporate ‌system where the Federal Reserve controls the money supply and the banks control it and the government dictates what we can and can’t invest in . The big⁤ public ​companies control our data in this​ system. We have ⁢little power to change it.

The Degens are traders, protocol designers and ⁢developers⁢ who want to vote on all things based on ‌the number ⁣of tokens and‍ rule the world with money generated by computer code.

We’ll ‍probably end up somewhere in⁢ between.

The real estate market, ⁣public and private companies, and debt securities⁢ still contain trillions of dollars to track, ⁢trade, and borrow. These will‌ not stay in the ​chain overnight. But the world is heading there.

DeFi is⁣ poised to lend, ⁢provide liquidity and⁣ ensure transparency as more assets are tokenized on the​ blockchain.⁢ Curve CEO Michael ⁢Egorov has borrowed money in line with the system. The world ​found out about his toxic debt because everything was in the chain. He​ was even called out by⁢ many people. Such dangers in ⁣the financial sector are known nowhere else.

The success of DeFi technology and the DeFi ecosystem has shifted the pendulum.⁢ DeFi’s transparency,⁢ efficiency and disintermediation could lead to it becoming the‌ standard across​ the financial system. ‌Unless banks innovate ⁤in ⁣lending,⁤ borrowing ‌and ⁣insurance that offer more opportunities for participation, they will be left⁤ out of competition.

Although‌ the experiments are​ not⁣ perfect, they are ⁣experiments. The Curve situation may be troubling, but the​ move ​towards decentralization will allow the market to function. ⁤Let⁣ protocols, teams and systems ⁤drive change.

DeFi neither ‍died ‍nor ceased to exist. ⁤It’s just coming to light.