During the ongoing Ethereal Summit in Tel Aviv, Ethereum creator Vitalik Buterin shared his criticism of Decentralized Finance (DeFi), the ecosystem of platforms that facilitate the delivery of traditional financial services with the help of Blockchain.
According to Coindesk’s Leigh Cuen, Buterin opined that people shouldn’t be encouraged to invest in “those things.”
@VitalikButerin says there is significant risk in DeFi, “they are new, they are untested, they do have a risk of breaking & we should not be encouraging people to invest their money in these things,” despite his excitement about the potential. #EtherealTLV
Stepping into untested waters
According to ConsenSys, DeFi represents one of the fastest-growing sectors of the Blockchain industry with more than 100 projects built on the Ethereum network, including stablecoins, DEXs, insurance, lending, etc.
MakerDAO, a platform for getting ETH-collateralized loans, is one of the most salient examples of such projects. Meanwhile, the likes of Etherisc and Dynamis are slowly reshaping the multi-billion insurance industry by eliminating many unnecessary costs.
However, despite all the excitement, Buterin slams DeFi as new and untested. Hence, there is “a risk of breaking.”
The Joseph Lubin-led company has just announced the launch of a new DeFi product.
Ethereum-focused blockchain firm @ConsenSys announced a new product suite for commercial applications of decentralized finance (DeFi), called Codefi @ConsenSysCodefi #ConsenSysCodefihttps
Codefi: Blockchain for commerce & finance. We provide the capability to digitize assets and financial instruments, including payments, equities, lending, and real estate on the blockchain
With that being said, Buterin doesn’t deny that DeFi holds a lot of promise. He finds its “very powerful” that people from around the globe will be able to choose their own financial exposure.
Back in April, Buterin claimed that DeFi could move beyond the need for collateral and mold into an effective credit system on the Blockchain.
With the 2017 ICO craze whirring away in the background, DeFi could become the next big thing for Ethereum.
By Alex Dovbnaya