Sunset at YAM? How to move towards a sustainable path to DEFI
source|blog.rotki.com
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introduce
This article explores the following topics: what is DeFi, what new possibilities will be unlocked by DeFi, why DeFi is so cool and popular; and then talk about the bad side of DeFi, including encouraging people to take risks, YOLO (You only live once) mining Mining and unaudited contracts brought into focus by the recent YAM fiasco; finally, looking ahead, analyzes the lessons that the community needs to learn in order for Defi to develop sustainably and reliably for decades to come. You know, financial tools are not just for some people who are active on Twitter, but are open to people all over the world.
What is DeFi
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decentralized exchange
decentralized exchange
picture
loan agreement
pictureCompoundandAaveandSuch a protocol allows users to earn interest by lending their assets, or take out loans after staking them. MakerDao also providespicture
synthetic assets
pictureSynthetixandToken Setsand
Such a synthetic asset protocol combines multiple different assets into a single asset. This way, users only need to hold one synthetic asset to gain exposure to multiple assets.
What new possibilities does DeFi unlock?
There is actually nothing innovative about DeFi. All of its content actually exists in some form in the traditional financial world. The amazing and revolutionary thing about DeFi is that it is completely decentralized and permissionless. Anyone in the world, no matter where they are or what their background is, can use DeFi products. It is bringing countless possibilities to people all over the world and building a new permissionless financial system.
The dark side of DeFi
Like anything involving money, DeFi has also attracted a lot of greed, short-term speculators and short-lived projects.
The bad thing about mining is that there are people like "DeFi Chad" and "Defi Degen". This kind of miners influenced by emojis blindly jump from one protocol to another, never considering the security of the contract, just chasing the maximum profit, and quickly throwing the tokens in their hands to the newly joined The person then starts the next cycle. Such an operation is clearly unsustainable.
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YAM is a prime example of irresponsible practices in DeFi. The experiment lasted less than two days. This project was launched at 19:00 UTC time on August 11, 2020onlinesecondary titlecollapse。
what happened?
what happened?
For a technical explanation of the project's vulnerabilities, readers can readThis articleThis article
When people realized this, the market value of YAM plummeted from $60 million to 0 in a short period of time. Everyone who bought YAM and didn't have time to sell it lost money because they couldn't sell it. Uniswap's liquidity providers are also facing the same situation, because they will suffer losses every time someone sells YAM through them.
can this be avoided
certainly!
certainly!
Many influential people in the encryption circle (including myself) have issued warnings, telling everyone that they will lose everything in the end. But some of the most basic precautions could have been done:
write contract test
If you claim this is an experiment, please do the following: a) protect your users with code that sets storage limits; b) protect your users with code that sets security hatches
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Ponzi game
To make matters worse, YAM is clearly a Ponzi game from a token economics perspective. Note the difference between a Ponzi game and a Ponzi scheme, which is explained in this article.
This is a "fair" and transparent Ponzi game, but it is "Ponzi" anyway. Even though people in crypto circles have done a lot of research on this project, I'm still 100% sure that most people don't realize that they are being scammed and end up losing their money.
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Bidding on Twitter
I personally find it very disgusting that more and more people from the Ethereum community are participating in mining on Twitter, and many of them I actually respect.
I sincerely hope that everyone can learn from this incident. If you participate in these unaudited, unsafe Ponzi game pump-ups, you are also responsible if DeFi is underestimated. If we really want to promote DeFi to the masses, we can no longer have this irresponsible behavior.
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What price do we have to pay?
some people lose a lot of money
The market cap dropped from $60 million to 0.
People who buy YAM are like holding a hot potato and watching it burn until all their investments are wiped out.
Liquidity providers on Uniswap suffered losses for providing liquidity to sellers of dying tokens.
The large gas fee consumed (over 300 gwei) becomes meaningless
Last but not least, non-crypto people rolled their eyes at us, our reputation was damaged. I tried to explain this to every non-currency person I know and get their perspective, they all think that cryptocurrency is for scams and Ponzi schemes. Can you blame them?
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Responsible Decentralized Finance
If there is anything worth remembering from this article, please read this section. DeFi is good innovation and here to stay. It's just that we all need to be more responsible for it.
Responsible DeFi User
As a user, don't rush into every new project that comes out and promises 100% return. You need to ask yourself if you have done enough research, ask to see audit reports, ask people in the community about the bios of the founders of the protocol, and read the code and understand token economics when possible. Do your own research! If something too good to be true emerges, it's likely a scam or a Ponzi game.
For God's sake, I implore founders or developers, don't test the product. Be responsible. Users don't heed warnings or disclaimers. If it's an experiment and you want to test it on mainnet, no problem. Well, set deposit limits and centralized security hatches in the first few months. User safety is your responsibility. Using "just a trial" as an excuse to avoid responsibility is unacceptable!
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Disclaimer: ECN's translation work aims to deliver high-quality information and learning resources for the Chinese Ethereum community. The copyright of the article belongs to the original author. Reprints must indicate the source of the original text and ethereum.cn. For long-term reprints, please contactethereumcn@gmail.comAuthorize.
