DeFi

I’ve been involved with blockchain since around 2018, with a tilt towards TradFi and enterprise use cases. In all that time, the thing that drew me in was never the price. Back in 2021 I wrote a post with the deliberately unhelpful title Don’t use blockchain. The argument was that blockchain is a bad database and a worse computer: slow, expensive, single-threaded by design. It has exactly one job worth paying that cost for: removing third-party risk. You stop having to trust that some operator keeps running the right software and doesn’t abuse their access. That’s it. Everything else you should minimize. ...

If you’ve been watching the rsETH situation unfold over the last week, you’ve probably seen the headlines. A $292M bridge exploit, $13B of TVL fleeing Aave, stablecoin pools pinned at 100% utilization for days, and a slow-motion governance scramble that’s still going on as I write this. It’s tempting to file it as “another DeFi hack” and move on. I don’t think we should. This one is unusually instructive, not because the hack itself was novel (it wasn’t, bridges keep getting exploited, and as I’ve said before, I think bridging is an anti-pattern), but because of what the response showed us about how DeFi actually works under stress. We got to see something here that’s hard to see anywhere else. ...