Bernie Madoff’s death brings back to the public eye the Ponzi scheme that was closed eleven years ago.
It was a financial case that touched the financial world, shocked Wall Street, in the 40 years of the time to fool 136 countries, as many as 37,000 people, involving more than $ 60 billion, so that many ordinary investors, large financial institutions, banks, rich families suffered huge losses, to many families, and even the tragedy of the trader’s own family.
Madoff weave the net of fraud can be as long as 40 years without breaking, a big reason is that the investment model is not open, not transparent.
This kind of shady operation, if put into the world of DeFi happens to be the perfect solution.
DeFi refers to the blockchain industry’s decentralized finance, which has been very hot in the past two years, and currently has a total lock-up of $76 billion, such a volume of funds has exceeded the total assets of many old banking giants such as Deutsche Bank.
Openness and Transparency
Traditional finance is managed by a centralized team and is prone to people-related risks, like the global financial crisis of 2008. In contrast, DeFi does not need to rely on intermediaries/third parties and relies on the decentralized nature of blockchain to create trust by eliminating third parties.
At the same time, DeFi’s top-level technical design circumvents the risk of opacity, with open and transparent data on the chain, true traceability of whether the project is open source and auditable, and funds readily available for replenishment. If the development team of a protocol decides to close/terminate the project, other companies/individuals can use the open source code.
In addition, DeFi introduces the concept of decentralized DAO governance, through which the users of the protocol have the right to vote on major decision making, such as adding protocol features, deploying new versions, etc., further improving the degree of decentralization of the DeFi project.
By eliminating third parties and realizing the concepts of decentralization in the underlying technology, open and transparent data on the chain, and DAO public governance, the security, privacy, and transparency of the blockchain are shown to the fullest on DeFi.
DeFi is still in the budding stage, we can expect more financial and other application scenarios in the future, DeFi is just a seed now, it may grow into a big tree in the future!
Liquidity mining, revenue crushing
When reviewing the history of the Madoff Ponzi scheme, there was one figure that really caught my attention: a 10% annualized return.
This seemed at the time, although not ridiculously high, but can be unaffected by the market conditions, stable year after year is very difficult, so such a stable rate of return to attract many people crazy to invest money into.
But if you put this yield in front of today’s deep DeFi players, I’m afraid they’ll say: “This is my day-to-day (dog’s head).
In the past two years, the DeFi boom has swept through the crypto industry, and the form of “liquidity mining” has injected vitality into the chain funds. But it’s difficult!
So we can see that DeFi can, to a certain extent, solve the problems of over-centered and opaque centralized finance, which bring about shady operations and lack of supervision; the innovative financial games on DeFi also bring more high-yielding financial products to investors, giving birth to a large group of “DeFi scientists” and creating Many stories of riches.
However, even in a system as secure, private and transparent as DeFi, there are many problems. For example, if you are in full control of your assets, you will not be able to retrieve your funds if you don’t have a backup of your helper/private key, or if your contracts are hacked and there are some security issues associated with that. macos/deepLFree.translatedWithDeepL.text
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/defi-financial-change-transparent-public-governance-to-avoid-risk/
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