Decentralized finance (DeFi) led cryptocurrency’s rapid growth in early 2021, but the crypto market has since plummeted in value. Global markets have played a role, but so has recklessness among developers when it comes to both cybersecurity and (often self-serving) inflationary token models. Too much DeFi has been based on tokens minted from nothing or tokens that finance other tokens at high interest rates, with no part of the entire activity having any real underlying economic activity to back the yields offered. Secondly, security issues, hacks and exploits of DeFi contracts and bridges have been widespread, and most notable DeFi platforms have suffered some form of exploit. Lastly, the lack of a uniform standard for defining DeFi contracts has limited DeFi to native smart contract platforms and tools, which also limits potential for growth, universal clients and, ultimately, adoption. Despite these failures, DeFi is likely here to stay. But it will need to see changes and improvements to have true utility.
Read more : From neglecting security to bad tokenomics, DeFi has played a hand in its own decline.
