Jameson Hudson and Vitalik Buterin, among the personalities, warn about the risks of DeFi. Meanwhile, some other Ethereum figures ask not to be so harsh on failed projects.
In recent days, specialists and personalities from the Ethereum community have warned about the risks of participating in DeFi platforms. The opinions of Jameson Hudson and Vitalik Buterin, among other figures, arise regarding the collapse of Yam Finance, a DeFi protocol that generated the massive loss of funds due to an error in its code.
Buterin recently told his followers that they do not have to participate in the latest DeFi project to be on Ethereum. He even advised them not to use DeFi unless they had some understanding of how it works, as well as to participate with small amounts of money.
The Ethereum co-founder also said that he does not directly participate in DeFi protocols or yield farming. However, he noted that on some occasions he had managed to earn some money by doing token exchanges on the Uniswap website.
Good Intentions of DeFi Projects Are Not Enough
Ethereum foundation developer Jameson Hudson, Ethereum foundation developer, does not think that the Yam Finance team had any bad intentions or planned the platform’s collapse.
Hudson does not consider it correct to expect or encourage the failure of projects and to make a dent in them when they fail in their purposes. However, he made it clear that the risks of participating in DeFi are extremely high.
It seems to him that the most correct thing would be to help the teams that comprise these projects, to recover the funds, or to compensate the community. He establishes this opinion given that risks are inherent to this ecosystem. Therefore, he recommends educating people so that they can be more aware of this and take responsibility.
Taylor Monahan, CEO, and Founder of MyCrypto, who has been dedicated to warning about the risks of DeFi on social media, validated Hudson’s comments.
According to Monahan, it is virtually impossible to strike a balance in a high-value low-risk activity in a tweet thread. In the same way, she agreed that it is necessary to look to the future rather than to the past since we cannot change it.
She said this regarding how the developers of the YAM project can take control of the situation and evolve towards something better in the future. Monahan said that YAM enthusiasts and those involved in similar projects should share the mistakes that they have made.
Arguments against DeFi Developments like YAM
Péter Szilágyi, one of the main Ethereum developers, has a different opinion. He accused via Twitter the main promoter of YAM, Brock Elmore, of having planned the collapse of the platform.
“You knew perfectly well that this was going to explode, but you insisted anyway. You were stubborn, beyond comprehension, and you deserve everything that happens to you from now on. This was not a mistake or an error. It was the blindness of power,” Szilagyi told Elmore.
Szilágyi responded to other users who criticized his somewhat aggressive attitude, emphatically making four arguments: “They could have used the evidence network. They could have done public audits. They could have made the launch without much commercial promotion. They could have set limits and security mechanisms.”
Vitalik Buterin had also previously warned about Yield Farming, noting that those who participate in this popular segment of the DeFi seem not to perceive the high risks that they face.
Various analysts have mentioned characteristics of DeFi that make them comparable to Ponzi-type schemes. This is due to the constant leverage of tokens between different platforms, which creates highly unstable multi-level structures.
By Willmen Blanco
