Decentralized Finance or DeFi is taking the market by storm offering promises of profit and exponential growth for investors. Many people are wary of this sort of messaging, labeling these sorts of activities as akin to pyramid or Ponzi schemes. Since developers of Ethereum figured out that all they need to do is issue a DeFi token and investors start pouring in GAS fees for the Ethereum network have skyrocketed.
When compared to the traditional stock market, cryptocurrency is both similar and different in many ways. The world finds itself in a form of crossover with one foot in the traditional financial realm and one in cryptocurrency. Much like the traditional financial world, the components of the industry exist at the mercy of those who control them, and there is no way to control the moral or ethical behaviors these individuals possess. While there are many DeFi projects that are ethically running and could benefit users, it’s impossible to say how many of them out there are illegitimate.
Sushiswap in particular has been gaining massive traction in the market and has been the centre of a $14m scandal that saw it’s anonymous creator Chef Nomi making a public apology and returning the $14m of ETH back to the company’s treasury.
While this certainly isn’t the last time we will see something like this happen in DeFi we have certainly learned what to look out for.