The centralized structure of recent failed crypto lenders like VoyagerDigital and Celsius has put blame on CeFi. But the real problem is inflated DeFi yields. mikejcasey explains…
You’re reading, a weekly look at the technological, economic and social events and trends that are redefining our relationship with money and transforming the global financial system. Subscribe to get the full newsletterLike much of what counts for debate in this industry, this take is partially correct but also misleading.
By contrast, people who lent tokens to DeFi projects such as Maker and Aave were – for the most part – protected by smart contracts that automatically redeemed the loans or collateral when needed. As Bankless co-founder, the reason why CeFi projects are not collapsing is because “the code is forcing them to pay back their loans. Not laws. Not attorneys. Not courts.”
The real problem is the interrelationship among the inflated yields that DeFi projects were offering, the unsustainable “number go up” expectations for token prices on which those yields were based and the entire interconnected complex of CeFi and DeFi speculation that emerged out of all of that.DeFi has much to offer the world of finance.
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