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According to Vitalik, DeFi users underestimate “the risk of an intelligent contract”.

July 29, 2020

The co-founder of Ethereum, Vitalik Buterin, has warned of the dangers of an “intelligent contract risk”. in DeFi protocols in an interview on Ethereum’s fifth birthday.

Buterin also warned users against “risking their life savings” on DefI in her appearance on the Laura Shin Unchained Podcast.

Intelligent contract risk

When asked about his main criticisms and concerns about DeFi, Buterin replied:

“I think the most important thing is Many people underestimate the risk of smart contracts“”

According to Vitalik, DeFi users underestimate “the risk of an intelligent contract”.According to Vitalik, DeFi users underestimate “the risk of an intelligent contract”.

Buterin said that interest rates are exponentially higher than traditional bank accounts, which means that DeFi products are much riskier and “break” more often.. Buterin said he was not confident that self-tested platforms and protocols could guarantee that they would not “pause” by a certain percentage within a certain period of time.

“DeFi is still fine, however Don’t act like it’s a place you should work for so that many ordinary people can use their savings“”

There was one this year Series of high profile smart contract exploits on DeFiExamples include the February bZx flash credit exploit, which resulted in the loss of nearly $ 1 million in cryptocurrency, and Bancor’s smart contract failure in June, which shutdown the network.

Yield farming is not sustainable

Buterin is also concerned about the unsustainability of “profitable agriculture” and explains that high interest rates are paid for each protocol that the loan grants. Platforms will no longer “print” coins to lure people into their ecosystems foreverhe added:

“It’s a short-term thing. And As soon as the attractions disappearthat was easy to see Yields will again fall very close to zero percent“”

In defense of DeFi

Vitalik Buterin has not always criticized decentralized financing and Earlier this year, he strongly defended the emerging industry after a few high-profile hacks. At the Ethereum Virtual Summit in May, he said:

“”Many responsible DeFi projects have survived for a long time without attack. It is definitely not an inherent characteristic of DeFi itself, and there is a way to do it responsibly. “

Continuously Criticism of centralized finances and stock exchanges that are “repeatedly attacked”.

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