DeFi or Centralized? What is right for the Crypto future?
With the widespread adoption of crypto, the community that invests in digital assets seems to be split between those who believe in DeFi and those who believe in regulated CeFi. Can scams and no-purpose coins gain traction on the market, or should all existing projects be fully regulated?
The Uniswap Exchange developed by Uniswap Labs was designed to be a completely decentralized crypto exchange that allowed any ERC-20 token to be listed or sold. Uniswap contracts manage each pair and it is possible for anyone, including you, to become a “liquidity provider” by putting reserves in the pair’s pooled assets.
Some have questioned whether the SEC will regulate cryptocurrencies, but Gary Gensler seems very determined to take control of that growing market.
Decentralized exchanges play an important role in decentralized finance, or DeFi, which has become extremely trendy recently. Operating without any middleman, but through smart contracts — they fulfil the need for no control from a single entity declared by crypto enthusiasts. The potential bugs in the smart contracts, leading to massive losses in assets, leave an open question though on who is responsible if anything on the execution of the contract goes wrong.
Supporters of the DeFi claim that the technology makes finance more accessible and cheaper to a regular user, while the opponents want to protect the investors from high risk investments and scams.
In August speech at the Aspen Security Forum, Gary Gensler said, “Right now, we just don’t have enough investor protection in crypto. Frankly, at this time, it’s more like the Wild West” and “If we don’t address the issues, I worry a lot of people will get hurt.”
Centralized or Decentralized it seems that the market is in strong need for regulated tools and whitelisting rules embedded in smart contracts allowing investors to enter the evolving market of crypto with more confidence and trust.