Can we save DeFi from itself?
It’s no secret at this point that I have an axe to grind with the Decentralized Finance (DeFi) Industry, and more specifically, how it’s consistently conflated with blockchain technology in the ways it’s presented to the mainstream population. The problem with this, as I’ve pointed out, is that essentially every ‘reason’ someone might suggest for why blockchain shouldn’t be a thing is the result of DeFi—the toxic and problematic industry built on the blockchain—but brings harm to the advancement of the underlying technology.
Don’t get me wrong. DeFi is amazing. Cryptocurrencies like Bitcoin, Ethereum, Polygon, USDC and even CBDCs (Central Bank Digital Currencies) are going to change the world forever, likely for the better. But in my opinion, the list sort of ends there. The rest of crypto and DeFi is one gigantic, intermingled, fraud-fuelled casino taking place on unregulated exchanges that are so poorly managed, there’s now potentially upside in betting on which will fail next.
Nothing could sum up the current state of the DeFi industry better. In the face of the ponzi crashing down around us—Luna, then Celcius, then FTX, and now maybe everyone else—the same people who lost their money gambling via yield farms and liquidity pools are rushing to bet on how they will lose their money next.
These aren’t crypto believers. These are people who are comfortable taking massive risks with their money at the hopes of getting lucky and retiring early. Unfortunately, they represent the majority of what should be a respected and growing industry. Real crypto believers don’t gamble the thing they think will be so valuable. They buy it, hold it, save it, and increasingly use it as money—the purpose which it’s intended for. Sure, some people gamble money, but we call those people what they are, gamblers.
Cryptocurrency is one of the most important tools ever built using blockchain technology. It could, and hopefully will, replace all other forms of money over the next 50 years. It’s simply better than the money we use today. But the antics of the DeFi industry threaten all of this. Events like FTX will prompt regulators like the SEC to throw the baby out with the bathwater; and before we know it, this revolution will become as illegal as most people already think it is. We need to change the narrative and modify our behaviour so that cryptocurrency and the DeFi industry it has created can not only survive, but thrive as intended.
If you’re into crypto/DeFi, gamble if you’d like, but also try expanding your knowledge of the poker chips you’re holding beyond their speculative value. Learn about money, learn about Bitcoin, learn about the blockchain, and take part in the communication effort needed for others to understand why those things are insanely valuable for humanity. Things like the utility of a decentralized financial system, or the importance of money that can’t be inflated or controlled by a centralized power. This is the narrative crypto and DeFi should be built around. Not FTX or SBF or WAGMI.
We can do better. So let’s.
This will probably be my last time focusing on the negatives of this industry for a while. It’s time to practice what I preach, dive into the positives, and spread the gospel of decentralization.