Theses D

Theses D: Current Decentralization Was Fake And There’s Need For Doing Proper Re-decentralization

D1: Decentralization in finance never actually happened

The endeavor to achieve true decentralization in the financial sector has been fraught with misunderstandings. Initial efforts to decentralize finance inadvertently led to transferring custody to unidentified entities, lacking a clear system to verify who controls or owns Proof of Work (PoW) or Proof of Stake (PoS) nodes. Far from promoting decentralization, this development has instead facilitated a greater capacity for concealment.

Contrastingly, traditional finance systems have mechanisms in place to prevent over-centralization and to protect the rights of minority shareholders against the dominance of major stakeholders. These systems are designed to ensure fairness and transparency, preventing any single party from exerting disproportionate influence or engaging in exploitative practices. In stark contrast, the DeFi, Web3, and blockchain landscapes lack similar regulatory frameworks or tools. This absence makes it significantly easier for dominant entities to mask their control, potentially exploiting smaller participants without the checks and balances present in traditional financial systems. This scenario highlights a critical oversight in the push for decentralization, underscoring the need for mechanisms that genuinely ensure equitable participation and safeguard against the concentration of power.

D2: There is a viable need to start decentralization again and doing it right

The movement towards national blockchain initiatives is poised to usher in a new wave of products and a phase of 're-decentralization.' This approach envisions a system where the broader society collectively assumes responsibility for the custody and security of a national, decentralized blockchain. While initially, this may appear as a move towards centralization or nationalization, it aims to culminate in a genuine re-decentralization of finance and credit. In this envisioned scenario, decentralization becomes not only verifiable but also a palpable reality, marking the advent of what could be termed Decentralized Finance Version 2 (DeFi v2). This evolution represents a shift towards a framework where decentralization is transparent, accountable, and inclusive, embodying the foundational principles of the DeFi movement.