DeFi is a decentralization theater but there is still merit to it

It’s pretty well established DeFi is actually CeFi — centralized finance — as ultimately there are always some actors running the show from behind the curtains, at least in the Ethereum smart contracts world. There is tons of counter party risks involved.

However, decentralization is just means to an end. The end goal is uncensored, parallel financial system resistant to regulations and tyranny of the state.

Surprisingly, on that front DeFi is actually delivering some value. Instead of comprehensive decentralization, DeFi employs layered obfuscation.

DeFi goes well beyond usual “blockchain” obfuscation layer. A web of cooperating smart contracts is a new level of conceptual barrier for state clerks and LE to tackle.

Is obfuscation-based regulatory resistance sustainable in the long run? Probably not, but current DeFi buys time to develop more resilient solutions.

Meanwhile you can enjoy the thrill of anonymous participation in uncensored, experimental financial services. As you would expect, in such a world, most offerings are scams. It is your personal responsibility to navigate this — as it should be.

Soon, you will notice gems of non-scam and potentially useful services.

To name one example, efficient anonymous p2c exchanges are on the rise. These exchanges go one step further than peer-to-peer exchanges: they operate in a peer-to-contract model. You are effectively trading against a robotic contract. The contract is a highly autonomous entity pre-programmed to trade with anonymous users on one hand and paying anonymous liquidity providers on the other side.

The main limitation of these exchange tools is that you cannot trade arbitrary cryptocurrencies like Bitcoin or Monero. You cannot trade against real USD either. You can only trade standardized Ethereum tokens. Anything else like Bitcoin or USD only exist in this ecosystem as IOU-s of actual assets (wrapped BTC, stablecoin USD, etc). But that is a story for another time.

In summary DeFi is ultra complex phenomenon. While far from “decentralized” and while riddled with scams it does have a merit and does further the grand goal of apolitical, parallel financial infrastructure you cannot be “cancelled” from.