DeFi Definitely Isn’t Dead | Nasdaq

I’ve seen a couple articles in the past few days about the death and decay of decentralized finance (DeFi).

The impetus has been the recent issues in DeFi caused by an exploit and crypto founder who is a horrible risk manager. In short: The founder of a prominent automated market maker (AMM) Curve Finance loaned out nearly half of the protocol’s CRV tokens on a few DeFi lenders, and was almost liquidated after an unexpected but somewhat predictable DeFi exploit depreciated the price of CRV.

Adam Blumberg is a certified financial planner as well as the co-founder and chief educator for Interaxis, a company trying to bridge the education gap between digital assets and traditional finance. He is a contributing writer for CoinDesk’s “Crypto for Advisors” newsletter.

The first article was a great op-ed in CoinDesk, written by Daniel Kuhn, who said DeFi is “dead inside.” The second was a report from JPMorgan, which argued the overall sector is in “shrinking or stalling mode.” These commentators couldn’t be further from the truth, however.

I don’t think DeFi is dead, nor is it shrinking.

The idea of what DeFi was during the summer of 2020 is certainly, and thankfully dead. It was a time of too much bribery, liquidity and talk of yield. “Yield farming,” the fuel to DeFi Summer’s fire, eventually calmed down and a few decentralized platforms emerged as market leaders – many of which took professional “white glove” services in aim for expansion.

But the sector is not perfect. As Daniel noted, we also have far too much power in the hands of too few people. Sounds too familiar.

The difference with this technology versus tech of the past, is that DeFi has been financialized to an extreme. It’s not ideal when a bunch of programmers start playing financiers.

But we need to remember, we’re still experimenting with the technology. We’re not sure how to use it. Mistakes will be made.

What we’ve accomplished in the last few years is to build robust systems that don’t operate within the confines of traditional corporations, banking rails or even geographical borders. The system has been secure enough that the financial and corporate heavyweights like Mastercard, Visa, Coca Cola, Anheuser Busch, Nike, Starbucks, BNY Mellon, BlackRock and Fidelity are devoting money and…