Chao Pan: DeFi on the Seesaw
Editor's Note: This article comes fromMoneyness Institute (ID: moneyness)Moneyness Institute (ID: moneyness)
, Author: Chao Pan, Head of MakerDAO China, released with authorization."Like most blockchain nouns, DeFi is a trendy catchphrase that sounds"large and luxurious
promotional slogan, rather than an accurate description of things. This slogan makes the decentralization of finance a realized result rather than a process itself. Therefore, it is not difficult for us to understand the misunderstanding, ambiguity and polarization generated by DeFi."
— DeFi "When we talk about decentralized finance, we often take decentralization (blockchain) as the main body, and then discuss and design applications and protocols with financial attributes. But to understand decentralized finance more comprehensively and systematically, I tend to take finance as the main body, thinking about which areas can achieve decentralization and what are the benefits... Distributed is not unique to blockchain, transparency, censorship resistance and immutability are difficult for the financial industry to be compatible The core and advantage of decentralized finance is that it does not require permission. There are three levels of permission-free: developers without permission, bookkeeping without permission, and users without permission, corresponding to code open source, public chain and open account... only Financial projects that need to satisfy users without permission can all belong to the category of decentralized finance, while developers and bookkeepers generally need to balance efficiency, security and decentralization without permission.
theory and practice
Tradeoffs are a delicate thing.
Which one is more decentralized, the Ethereum network with only Dai or the Ethereum network with USDT? The answer that came out of my mouth was: pure Ethereum network. From the perspective of asset custody, it is true. But what if we measure it from a licensing perspective? A network with no restrictions on all kinds of centralized collateral appears even more permissionless. Asset custody attributes cannot determine the degree of decentralization and policy recommendations of DeFi.
An open public chain cannot limit the issuance of assets on its chain. From an abstract theory, carrying more assets is always a good thing. However, in practice, if an asset is mainly used for gray and high-leverage transactions, the more open the public chain, the more risks and hidden dangers it will bury. 312 When the market fluctuated violently, the unprecedented increase in the handling fee of the Ethereum network led to the paralysis of financial applications. The reason behind this was precisely the virus-like prevalence and resource occupation of USDT. This is a "tragedy of the public chain" and the lack of system governance. Not only financial applications, but the public chain itself, especially in the early stages, should also be critical and control over assets.
And who chooses to govern the protocol and who responds to the crisis are the opposite sides of the same coin. The administrator's authority determines the system changes, and the risk is shared by the user. This will be a balance sheet that will never be balanced. User feedback and signal collection can help the system reduce bias, and the final decision-making power needs to be firmly in the hands of managers, whether through super authority or token voting, but correspondingly, when a crisis occurs, it should not be the community (or users) ).
I don't know what the ultimate form of DeFi is. "When the flower opens, the bud disappears. People say that the bud is negated by the flower. When it bears fruit, the flower is regarded as a false form of existence of the plant, and it is said that the fruit is the true form of the plant and appears instead of the flower. ” Pursuing “true DeFi” is like treating a solitary fruit as the whole of a plant.
