DeFi can't hold a candle to the centuries-old trust-based system called hawala

economictimes.indiatimes.com:

CDOs, which repackaged risky mortgage bonds to make them look safer than they were. “CDOs are nothing but a massive Ponzi scheme,” said the villain of a fictional account of the 2008 meltdown. How much more carnage will it take this time to know that blockchain-based lending is similarly reckless? The idea that one could ditch regulated intermediaries like banks and make far higher returns by lending digital assets was a key attraction of decentralized finance, or DeFi. But that was before the bloodletting began, triggered by the collapse last month of the cryptocurrency pair Terra-Luna. The appeal of changing money into TerraUSD, a stablecoin that promised 1:1 convertibility into dollars, lay in the near-20% yield on TerraUSD deposits. Withdrawal of funds from Anchor Protocol, the main DeFi lending application on the blockchain, crushed the coin, as well as Luna, its sister asset. Soon after, lenders Celsius Network and Babel froze deposits. BlockFi Inc., a Peter Thiel-backed lending platform, said it “fully liquidated or hedged all the associated collateral” of a large client believed to be Singapore-based Three Arrows Capital, a troubled crypto hedge fund. BlockFi is reducing headcount by 20% just as Coinbase Global Inc., the largest US-based digital asset exchange, lays off 18% of its workforce. There’s no end in sight to the crypto winter. Of the $252 billion of investor funds tied up in DeFi protocols last December, less than $75 billion remain.

Did you Know?

Premium tea company Vahdam India has gifted a personalised NFT to Parag Agarwal the newly-appointed Indian-origin CEO of Twitter

Blockchain technology promised the Impossible Burger version of finance: lending without trust, the most