The Problem Isn’t Hacks - It’s Fake DeFi
I want to revisit the widely discussed post from yesterday by the founder of Curve about the problems in DeFi. There’s one revealing idea in it that, surprisingly, no one seems to have noticed.
Michael Egorov, the founder of Curve, criticized the current state of DeFi and pointed to what he considers the core issue: centralized points of failure.
Let me quote three of his statements:
- This amount of absolutely preventable hacks we see in DeFi (with root causes attributable to CENTRALIZED points of failure) is enormous recently.
- This damages out industry, and I build for this industry.
- Number of single points of failure should be reduced, not increased.
Let’s pause on that. A person building products for the DeFi industry is calling for a reduction in single points of failure within DeFi - because they are harming the entire industry.
Am I the only one who finds this odd?
A system can only be considered decentralized if, no matter which part you remove, alternative paths still exist. That’s what decentralization really means - the absence of a center. In such a model, a single point of failure simply cannot exist.
What harms DeFi is not single points of failure - because in true DeFi, they don’t and can’t exist. The real damage comes from projects that do have single points of failure, yet present themselves as DeFi by calling themselves decentralized. That’s what discredits the entire space: when even builders within it accept the presence of single points of failure and merely argue they should be reduced.
When I first heard the term DeFi, I went to DefiPrime.com and found a striking example that became my benchmark for decentralized finance for years: the Lightning Network. In this payment system, there truly is no single point of failure. That’s when I thought: DeFi is actually impressive.
You might say this sets the bar too high - too idealistic, even unattainable. But it’s not. It’s not just achievable, it’s already been achieved. The Lightning Network has been operating for eight years without a single point of failure. And if such systems already exist, then they are what should be called DeFi - not projects where the goal is merely to "reduce" single points of failure.
Want to see how this works in practice and understand that truly decentralized finance is not a utopia? Try moving some Bitcoin into the Lightning Network. And if you ever want to swap it for any other cryptocurrency, you can always do that on rabbit.io - at the best available rates, with no limits and no registration.
