The irony of this post criticizing DeFi and blockchain in the wake of FTX is that those decentralized applications are working just fine in this downturn. Aave and Uniswap aren’t failing, they are thriving.
Isn’t that the point? The protocols are built to resist changes by single entities and continue working as expected, handling user deposits non custodially, regardless of market activity. HN can declare a dozen crypto deaths with each new CEX and Uniswap will just keep filling orders for whoever is sending value through it.
I don't know, you're declaring victory because applications didn't stop working during the downturn, but I don't know that the problem was that applications stopped working during the downturn but rather that various service providers ran into financial trouble.
The goals of DeFi and web3 is to create structures that do not rely on centralized service providers, and are able to resist control of single bad actors and provide certain clear and transparent security guarantees. In that they have so far succeeded.
I wouldn’t call it victory yet. We still have years of figuring out which blockchain, DEX and DeFi models work and which will fail, most of this new tech is only a couple years into development. But the long term 10+ year vision seems clearer.
DeFi really is just a series of distributed (not necessarily decentralised) applications that enable parties to enter into agreements involving virtual tokens without the need for a contractual agreement between them. Not relying on contractual agreements places enormous constraints on what DeFi can do. For example, DeFi can't handle counterparty risk at all. Therefore DeFi doesn't remove the need for conventional financial institutions that rely on contractual agreements, such as so-called "centralised exchanges" and "lending platforms". It's disingenuous to say DeFi is fine because it didn't fail unlike those centralised exchanges, because DeFi doesn't (and can't) provide the same services that centralised exchanges provide (namely, custodial services and trading that isn't limited to virtual tokens).
DeFi never claims to provide the exact same fiat and off-chain services as CeFi and CEX. It has specific goals, like replacing custody with non-custody, or replacing a centralized exchange with an automated market maker that no single party can control.
This has different risks and trade-offs, obviously, but users who opted for Uniswap instead of FTX as their crypto exchange are probably pretty happy with their decision.
That's the protocol working exactly as it's designed. Everything was transparently visible. Anyone could see where the funds were at any given point, what the liquidation price was, and what the total liabilities were.
If you ride a fast motorcycle and fall off because you were speeding, it's not really the fault of the motorcycle, is it?
Yes, it is the fault of the motorcycle. You can "fall off" a motorcycle because of the design of a motorcycle, and it's something that doesn't happen with a car. Cars have risks when speeding as well, but they're different, and lesser, because of the protections afford by the car itself.
It's like you're subtly trying to highlight how terrible crypto is, but not realizing it.
Let's expand the decentralized web without building a crypto wall around it.