{"id":20180,"date":"2022-06-17T17:23:53","date_gmt":"2022-06-17T17:23:53","guid":{"rendered":"https:\/\/egrowonline.com\/?p=20180"},"modified":"2022-06-17T17:23:53","modified_gmt":"2022-06-17T17:23:53","slug":"crypto-finance-isnt-always-defi","status":"publish","type":"post","link":"http:\/\/egrowonline.com\/?p=20180","title":{"rendered":"Crypto finance isn&#8217;t always &#8220;DeFi&#8221;"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<p>If something is financial and in crypto,<strong> <\/strong>does that mean it counts as &#8220;decentralized finance,&#8221; or &#8220;DeFi&#8221;? Short answer: No.<\/p>\n<p><strong>Why it matters: <\/strong>The question is more salient right now, with crypto lender Celsius Network <a target=\"_blank\" class=\"gtmContentClick\" data-vars-link-text=\"locking up users' deposits\" data-vars-click-url=\"https:\/\/www.axios.com\/pro\/fintech-deals\/2022\/06\/13\/celsius-pauses-withdrawals\" data-vars-content-id=\"c26e5dd4-f9b1-4cce-a36d-b0c6735628c9\" data-vars-headline=\"Crypto finance isn't always &quot;DeFi&quot;\" data-vars-event-category=\"story\" data-vars-sub-category=\"story\" data-vars-item=\"in_content_link\" href=\"https:\/\/www.axios.com\/pro\/fintech-deals\/2022\/06\/13\/celsius-pauses-withdrawals\" rel=\"noopener\">locking up users&#8217; deposits<\/a> as questions swirl about its solvency, <a target=\"_blank\" class=\"gtmContentClick\" data-vars-link-text=\"drawing interest\" data-vars-click-url=\"https:\/\/www.cnbc.com\/2022\/06\/16\/state-securities-regulators-investigating-celsius-accounts-freeze.html\" data-vars-content-id=\"c26e5dd4-f9b1-4cce-a36d-b0c6735628c9\" data-vars-headline=\"Crypto finance isn't always &quot;DeFi&quot;\" data-vars-event-category=\"story\" data-vars-sub-category=\"story\" data-vars-item=\"in_content_link\" href=\"https:\/\/www.cnbc.com\/2022\/06\/16\/state-securities-regulators-investigating-celsius-accounts-freeze.html\" rel=\"noopener\">drawing interest<\/a> from several state regulators.<\/p>\n<ul>\n<li>Celsius is a crypto company funded with an initial coin offering. It gives people interest on deposits in bitcoin and ether. So does that make it DeFi? Also: No.<\/li>\n<\/ul>\n<p><strong>Reality check:<\/strong> DeFi founders propose a different model for financial operations, one where everyone always operates by the exact same rules as everyone else, risk is always completely clear and no one gets a special deal.<\/p>\n<p><strong>What is DeFi?<\/strong> All the financial operations occur autonomously, on a blockchain, using a kind of computer program that blockchain types refer to as a &#8220;smart contract&#8221; (but I like to call a &#8220;robot on the internet&#8221;).<\/p>\n<ul>\n<li>Take a DeFi lender: Every single interest-earning deposit and every single loan that&#8217;s accruing interest can be seen on the blockchain. Similarly, every liquidity provider on an automated market maker can also be viewed, along with every trade it makes in each block.<\/li>\n<li>Compound Finance, one of the earliest DeFi money markets, shows daily updates for the total deposited and the total borrowed in each asset it supports right on its website. Here&#8217;s where you can find the <a target=\"_blank\" class=\"gtmContentClick\" data-vars-link-text=\"stats for ether\" data-vars-click-url=\"https:\/\/compound.finance\/markets\/ETH\" data-vars-content-id=\"c26e5dd4-f9b1-4cce-a36d-b0c6735628c9\" data-vars-headline=\"Crypto finance isn't always &quot;DeFi&quot;\" data-vars-event-category=\"story\" data-vars-sub-category=\"story\" data-vars-item=\"in_content_link\" href=\"https:\/\/compound.finance\/markets\/ETH\" rel=\"noopener\">stats for ether<\/a>. It currently has $717 million in ETH deposits and $13.7 million lent out.<\/li>\n<li>If you have the skills, you <em>could<\/em> make your own portal that gave you updates every minute.<\/li>\n<\/ul>\n<p><strong>The problem isn&#8217;t access<\/strong> to the information. The problem is making sense of it because so much is available.<\/p>\n<p><strong>On the other hand:<\/strong> Celsius doesn&#8217;t work anything like this. Going all the way <a target=\"_blank\" class=\"gtmContentClick\" data-vars-link-text=\"back to 2019\" data-vars-click-url=\"https:\/\/www.coindesk.com\/markets\/2019\/09\/07\/how-celsius-turned-its-crypto-ico-into-a-billion-dollar-lending-business\/\" data-vars-content-id=\"c26e5dd4-f9b1-4cce-a36d-b0c6735628c9\" data-vars-headline=\"Crypto finance isn't always &quot;DeFi&quot;\" data-vars-event-category=\"story\" data-vars-sub-category=\"story\" data-vars-item=\"in_content_link\" href=\"https:\/\/www.coindesk.com\/markets\/2019\/09\/07\/how-celsius-turned-its-crypto-ico-into-a-billion-dollar-lending-business\/\" rel=\"noopener\">back to 2019<\/a>, onlookers raised concerns about the transparency of its operation. <\/p>\n<ul>\n<li>At its core, Celsius has <a target=\"_blank\" class=\"gtmContentClick\" data-vars-link-text=\"always promised\" data-vars-click-url=\"https:\/\/www.gemini.com\/cryptopedia\/celsius-network-token-cel#section-earn-interest-stake-your-crypto\" data-vars-content-id=\"c26e5dd4-f9b1-4cce-a36d-b0c6735628c9\" data-vars-headline=\"Crypto finance isn't always &quot;DeFi&quot;\" data-vars-event-category=\"story\" data-vars-sub-category=\"story\" data-vars-item=\"in_content_link\" href=\"https:\/\/www.gemini.com\/cryptopedia\/celsius-network-token-cel#section-earn-interest-stake-your-crypto\" rel=\"noopener\">always promised<\/a> to return much more of the income it makes from loans to its users than traditional banks do.<\/li>\n<li>What it didn&#8217;t promise, however, was to make it clear how it earned those returns on a day-to-day basis.<\/li>\n<\/ul>\n<p><strong>Threat level: <\/strong>A DeFi platform couldn&#8217;t suddenly lock out users&#8217; deposits, as Celsius did this week. If it were even possible, they would have to post a proposal for a public vote and discussion first (giving everyone more than enough time to go into a bank run).<\/p>\n<p><strong>How decentralized, though? <\/strong> A project is considered decentralized when it&#8217;s controlled by lots and lots of people. For example, a project with 1,000 people with a vote over its future would be less decentralized than one with 10,000 people with say.<\/p>\n<ul>\n<li>That said, many DeFi projects are, in practical terms, controlled by a few people with most of the tokens. <\/li>\n<\/ul>\n<p><strong>Our thought bubble:<\/strong> Decentralization might have been the wrong place to put emphasis, though &#8220;DeFi&#8221; sounds like &#8220;defy&#8221; \u2014 which is fun. Maybe SeeFi could have been better? As in, users can &#8220;see&#8221; what&#8217;s going on. <\/p>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.axios.com\/2022\/06\/17\/crypto-finance-defi-decentalized-circle\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If something is financial and in crypto, does that mean it counts as &#8220;decentralized finance,&#8221; or &#8220;DeFi&#8221;? Short answer: No. Why it matters: The question is more salient right now, with crypto lender Celsius Network locking up users&#8217; deposits as questions swirl about its solvency, drawing interest from several state regulators. Celsius is a crypto [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":20181,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[39],"tags":[62,172,28,1957],"class_list":["post-20180","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ico","tag-crypto","tag-defi","tag-finance","tag-isnt"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"http:\/\/egrowonline.com\/wp-content\/uploads\/2022\/06\/1655475185806.jpg","_links":{"self":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/20180","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=20180"}],"version-history":[{"count":1,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/20180\/revisions"}],"predecessor-version":[{"id":20182,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/20180\/revisions\/20182"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/media\/20181"}],"wp:attachment":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=20180"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=20180"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=20180"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}