Regulatory capture of DeFi, web3 and crypto in favor of incumbents

[tommyz7]

I know and understand the potential of crypto. I'm in love of the technology which is so powerful, I actually thought that decentralization is going to take on governments and create a dream world for all freedom lovers all over the world. Oh, how naive was I.

I have spent years learning and building DeFi aka Decentralized Finance. It's literally about reinventing the wheel, rebuilding the finance industry except this time, making it transparent, permissionless, and trustless. Anyone can use it, KYC/AML does not exist, anyone can see where your money goes and no one can change the rules in the middle of the game. For someone who comes from a post-communist country, it sounds like a dream worth fighting for. After spending some time in USA, ironically enough, I'm even more convinced that this must be done.

Obviously, regular people who invest in crypto, have never really used crypto nor do they understand what is it about. I'm yet to meet a regular person who actually used DeFi. I only hear how crypto is pointless and has no value by people who claim they used it because they bought Bitcoin or Ethereum on Binance or other centralized exchange. This is as true as saying I bought Google stock so I used google and concluded google has no point or value.

The recent crypto crash was an amazing example of why DeFi absolutely rocks. Not a single DeFi protocol lost money and had any issues whatsoever during that crash but that's not what you've heard, is it? You've heard that crypto lost billions of dollars of users' money and it's not trustworthy and it's just a bunch of scammers. Celsius and Voyager are the two most known "crypto" companies that lost user's money, except they have nothing to do with DeFi. These are as-traditional-as-it-gets finance startups that took user money and lost it in a criminal way. The funny part is that Celsius owes users almost $5b and they still repaid DeFi lending protocol Aave instead of users thanks to overcollateralized loans. That's the difference between traditional finance and DeFi. When you deposit money in DeFi, you know exactly where it goes and what happens to it. Aave cannot just take your money and give it to some scammers like Celsius did.

This was a huge win for DeFi and probably, just possibly will mark the moment when we lose everything. Wealthy and powerful are watching, so are governments. They have seen how much better DeFi is, how much more efficient it is, faster, cheaper, accurate, and automated, it makes traditional finance look like a horse buggy next to a Maserati. They just got their validation and now they want it, they will do everything to control it, just like the internet.

For a long time, I was thinking that decentralization cannot be controlled. That this is the answer to all corrupted government officials and corporations that just serve a small group of interests and themselves. I guess being in my early thirties makes me naive. They know they cannot touch a smart contract, they cannot censor decentralized applications so they go after the people who build it. The reality is that no application can be truly decentralized from day one. It's something that is achieved over time. They rightfully concluded to not to play the game, play the player. They are suing crypto and trying to make it all securities so they can apply their 100 years old regulations and control it all. They issue illegal subpoenas and if the company does not comply they just make a blood bath for it. No startup or individual can withhold this kind of pressure.

https://twitter.com/x/status/1549414157925195779

View: https://twitter.com/RepTomEmmer/status/1549414157925195779


During World Economic Forum financial industry leaders called DeFi a "shadow economy", a temporary state of DeFi that needs to be fixed by the biggest banks and funds of the world. They will take over DeFi, make it permissioned, make themselves gatekeepers and make everyone else pay the fee to use it. The revolution that could free our finances, give people for the very first time full control over their finances, will become a merely 10x improvement in the efficiency for the current financial system. And that is an optimistic scenario. The pessimistic scenario is when politicians discover that they can build a digital dollar that can expire within 30 days of transfer if not spent or dynamic prices for goods that will adjust based on your income and many more evil ideas. Of course, these ideas can only work if all alternatives are made illegal.

The technology that was meant to free people from financial chains is being taken over while all financial slaves are applauding the masters and celebrating the death of true financial ownership. Oh, the irony.

I feels good to vent. I think this is a good place to do so as well. There's a huge community of very smart people in this forum and these people have the power to change the world. I hope that crypto and decentralization have a happy ending just like encryption. After all, a small group of geeky programmers called "cypher punks" won the battle with US government over cryptography in the early 90s. If not for them, the internet as we know it today would not be possible, nor would crypto.

 

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