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Accessing decentralized finance should be possible without centralized intermediaries. Unfortunately, most people only now realize how many of these entities there are and the damage they can do to the broader ecosystem. 2022 And beyond needs to be about self-sovereignty before things spiral out of control even further. It is essential to look beyond promises like “high yield” and “convenient user experience” and focus on whether your crypto assets are at risk first and foremost.
Rewards Are Worthless If Assets Aren’t Safe
It is not uncommon for entities in the crypto and blockchain space to tout words like “decentralization” and “user control” without living up to those standards. Just like the majority of exchanges are centralized and custodial, so are a significant amount of decentralized finance protocols. That may seem surprising, as the term “decentralized” is in DeFi by default. Just because a project uses smart contracts does not mean there aren’t people capable of pulling the strings, though.
That has become all the more apparent in DeFi these past few weeks. All of these “massive” platforms suddenly ran into issues almost simultaneously due to falling crypto prices and accelerated that process through their own failures. It is a further testament to how centralized companies want to control user funds and use them as they want with little to no transparency. Moreover, users who provide these funds in search of rewards cannot get their rewards when operations “need to be paused”.
Notable examples include crypto trading platforms Celsius and BlockFi, representing over $5 billion in combined user assets. They disabled deposits, withdrawals, trades, and other activities involving customer money. Furthermore, Celsius paused services weeks ago and still has no ETA on resuming services. Such behavior is unacceptable and highlights the need for users to step up and take control through self-sovereignty.
Making matters worse is crypto lender Voyager Digital halting their operations too. Like the other two providers, Voyager took risks with customer funds to provide them with high – yet unsustainable – yields. Investing in 3 Arrows Capital and other entities has not paid off, yet the end-user will pay the price for this mismanagement. True ownership can only exist when the user is the only one holding the private key, which is what DeFi is supposed to be all about.
Self-Sovereignty Is A Must In Crypto
While the above examples explain the current situation, these types of developments aren’t new in cryptocurrency land. Centralized exchanges have kept customer funds hostage multiple times over the past decade, and users have shifted to decentralized exchanges – and self-sovereignty – as a result. For some reason, most of them capitulated when decentralized finance came around and decided to relinquish that invaluable user control once again.
Achieving self-sovereignty in DeFi is not an impossible task. Dozens of projects exist or are in development to facilitate this approach. Notable examples include
- Portal: staking, lending, derivatives, and more on the Bitcoin blockchain
- Aave – open-source lending and borrowing across multiple chains
- Uniswap/Sushiswap/PancakeSwap/1Inch: decentralized exchanges with trading, swapping, and yield farming opportunities
- dYdX: non-custodial trading on Ethereum etc.
What is interesting is how the up-and-coming self-sovereignty solutions are built on Bitcoin.
Like Portal, projects like Gamma, Zest, GoSats, Money On Chain, and Sovryn are all building on the Bitcoin blockchain. They do so through either Stacks or Rootstock, Bitcoin’s respective smart contract and EVM-compatible ecosystems.
Users need to think twice before giving centralized players control over your funds, especially when they do not have your best interests at heart. Decentralized finance only requires peer-to-peer interaction without people pressing “pause” to prevent users from doing anything. Begin your journey of self-sovereignty today and remove funds from any platform not meeting that requirement before it is too late.
Image by Karolina Grabowska from Pixabay
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.