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Zain Raza
Feb 17, 2020
by Zain Raza

DeFi's Aim For Absolute Decentralization a Bit Daft-Charlie Lee

DeFi
The ecosystem of DeFi guarantees to run solo on the blockchain, eliminating the influence of centralized institutions in any form. Its foundations are based on running code and smart contracts on blockchain platforms, and an enormous amount of transactions can be executed on DeFi.

However, Charlie Lee begs to differ and said :

This is why I don't believe in DeFi. It's the worst of both worlds. Most DeFi can be shut down by a centralized party, so it's just decentralization theatre. And yet no one can undo a hack or exploit unless we add more centralization.

So how is this better than what we have now? https://t.co/F1HMSeqb6q

Money decentralization and the financial system are often inter-changed but are vastly different. Bitcoin and other payment currencies were all built to provide transactions over a secure medium.

When Ethereum entered the conversation in 2014, talks around decentralized money elevated and a metamorphosis occurred in the entire financial system. Moreover, the smart contracts with the aid of components like credit and borrowing are eager to revolutionize the way the traditional financial system operates right now.

The fundamental idea on which the genesis of cryptocurrencies is laid is decentralization coupled with security achieved via distributed consensus. Fueling the procedure demands the nodes, stakeholders, or miners to run on Proof of Work (PoW) or Proof of Stake (PoS).

DeFi target is to utilize these features to create a financial system of lending, exchange, payments and more. Also, taking such a drastic step consumes an ample amount of time and endeavour. Mostly, people involved are optimistic about DeFi ecosystem, but Charlie Lee chose to disagree. He enunciates :

I don't think it will work in practice. Truly decentralized finance, that is. Complexity will always lead to bugs and exploits. And it will always be semi centralized.

Bitcoin and other cryptocurrencies that came forth with time were all about decentralized existence of money, with time they have started to be more inclusive and have worked hard towards privacy and access ease.

Charlie Lee is of the view that the DeFi comes with a crop of complexities and players, that the total decentralization is absolutely not achievable. Ergo, the reliance on institutions would continue to prevail.

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DeFi's Aim For Absolute Decentralization a Bit Daft-Charlie Lee
Zain Raza
Zain is a fervid fan of bitcoin and has been meticulously covering the field for a fair amount of time now. An aficionado of Spider man, Liverpool and Slim Shady.

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