It is important to look beyond the promises of “high returns” and “convenient user experience” and focus on whether your crypto assets are at risk in the first place.
Access to decentralized finance should be possible without central intermediaries. Unfortunately, most people are only now realizing how many of these entities exist and the damage they can cause to the broader ecosystem. This year and beyond must be about self-sovereignty before things get out of hand.
Rewards Have No Value if Assets Are Unsafe
It is not uncommon for companies in the crypto and Blockchain space to advertise themselves with words like “decentralization” and “user control” without adhering to these standards. Just as most exchanges are centralized and custodial, so are a significant number of decentralized financial protocols. This may seem surprising given that the term “decentralized” comes by default in DeFi. The fact that a project uses smart contracts does not mean that there are no people capable of pulling the strings.
This has become even more apparent in DeFi in recent weeks. All of these “massive” platforms suddenly encountered problems almost simultaneously due to falling cryptocurrency prices and accelerated this process with their own glitches. It is further proof of how centralized companies want to control user funds and use them as they please with little or no transparency. Also, users who provide these funds in search of rewards will not be able to receive their rewards if operations “have to be paused”.
Notable examples include the Celsius and BlockFi cryptocurrency trading platforms, which together account for more than $5 billion in user assets. They have disabled deposits, withdrawals, transactions and other activities involving customer funds. Additionally, Celsius suspended services weeks ago and does not yet have an ETA to resume services. Such behavior is unacceptable and underscores the need for users to defend themselves and take control through self-sovereignty.
To make matters worse, crypto lender Voyager Digital is also ceasing operations. Like the other two providers, Voyager took risks with client funds to offer high but unsustainable returns. The investment in Three Arrows Capital and other companies has not paid off, but the end user will pay the price for this mismanagement. True ownership can only exist when the user is the only one who owns the private key, which is what DeFi is supposed to be about.
Self-sovereignty a Must in Crypto
While the examples above explain the current situation, these types of developments are not new in the land of cryptocurrencies. Centralized exchanges have held customer funds, hostage, numerous times over the past decade, and as a result, users have migrated to decentralized exchanges and self-governance. For whatever reason, when decentralized finance came along, most capitulated and decided to relinquish this invaluable user control again.
Achieving self-sovereignty in DeFi is not an impossible task. Dozens of projects exist or are under development to facilitate this approach. What is interesting is how emerging self-governance solutions are based on Bitcoin.
Like Portal, projects like Gamma, Zest, GoSats, Money on Chain, and Sovryn are built on the Bitcoin Blockchain. They do this through Stacks or Rootstock, Bitcoin smart contracts, and EVM-compatible ecosystems.
To sum up, users should think twice before giving up control of their funds to centralized players, especially when they do not have their best interests in mind. Decentralized finance only requires peer-to-peer interaction, with no people pausing to prevent users from doing something. It is best to start own self-sovereignty journey today and remove funds from any platform that does not meet this requirement before it is too late.
By Audy Castaneda
