It always was and always will be about decentralization. Beware of centralizing wolves in sheep's clothing.

People need to trust one another in order to do basic things together. But trust breaks down when there is misunderstanding, information asymmetry, or an imbalance of power.

With peer-to-peer technologies like BitTorrent, Bitcoin, and eventually #Ethereum, we discovered that decentralized protocols & maximally decentralized replicated state machines were the key to building a new trust foundation for the planet.

If everyone could directly inspect their own accurate copy of what happened and when, and if it was prohibitively expensive to change the recorded history, nobody could cheat the system.

The salient difference between CeFi and DeFi is what or who the user has to trust. With CeFi users have to trust a business to manage funds and execute the business’s services.

CeFi businesses have an adversarial relationship with their customers. DeFi code is a tool that supports a user’s intentions without an adverse or selfish agenda of its own.

DeFi, or really all smart contracts deployed on Ethereum, *unify* trust and execution. Value moves according to how code is written.

Compare this to CeFi, which as @BillHughesDC points out, looks a lot like TradFi:

Crypto OGs regularly mutter when they hear of someone being victimized, “not your keys, not your coins.”

CeFi is a recipe for continued victimization.

DeFi still needs to mature further, but it represents greater economic agency for consumers.

I agree with @amandacassatt, that the silver lining of all this is a reminder of the importance of decentralization.

And proof is that despite these recent shocks to the crypto world, on-chain financial activity is humming as usual. Self-custody wallets are providing trustless access to swap between assets, and DeFi protocols are functioning as intended.

But let us be crystal clear. FTX and other centralized financial institutions do not represent what we are building in Web3. We are building a future where you don’t — shouldn’t — have to trust an institution to ensure you have access to your assets.

We can’t let these events define our industry; we must strengthen our work on zk privacy tech and “full stack decentralization” including user interface elements.

.@ConsenSys is also taking decisive steps to decentralize its own products and services (check out @MetaMask Grants and our intent to launch a decentralized infrastructure network with @infura_io ).

The time is now to move from outsourcing trust to organizations that have failed repeatedly, to a future where blockchains automate trust — where trust is explicitly intrinsic to the math and code of the system, and transparency and guaranteed execution are inbuilt.

True #DeFi will enable real time automated proof of reserves (and eventually of liabilities), and will replace years-long reactive forensic audits and clean-ups with 100% proactive on-chain financial hygiene.


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good thread... Much truth...