Bankless How to Fix DeFi with Dan Elitzer
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May 31, 2023 Dan Elitzer, a partner at Nascent and a thought leader in DeFi, dives into the fundamental issues plaguing decentralized finance. He addresses security vulnerabilities and the crucial role of oracles, questioning what happens if major services like Chainlink go down. The conversation explores dependency-free applications and innovative liquidity solutions. Elitzer advocates for a return to core decentralized principles, emphasizing the need for resilient systems that minimize reliance on external data, paving the way for a brighter decentralized future.
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DeFi Security Concerns
- DeFi's progress is impressive, but significant security issues remain, as evidenced by the $3.8 billion lost in 2022.
- This poses a barrier to mainstream adoption and necessitates improvement beyond current security practices.
Security's Importance in DeFi
- Security vulnerabilities are a major obstacle to mainstream DeFi adoption, not the only one.
- Without significant security improvements, other advancements in UX and onboarding will only exacerbate potential losses.
DeFi's Vulnerability to Dependencies
- DeFi's vulnerability stems from over-reliance on external dependencies, like oracles and governance mechanisms.
- Minimizing these dependencies, especially at the base layer, is crucial for enhanced security.