Cryptocurrency whale Joe007 has argued on social media that decentralized finance (DeFi) projects are riskier “than Ponzi schemes,” as their founders could exit scam, or the project could be hacked.
Joe007’s comments came replying to a user who asked why he would never buy into any decentralized finance project. In his tweets, Joe007 argued that decentralized finance projects are centralized Ponzi schemes that use “random crypto trappings to lure in dumb money.”
The reasons are many, how about this one. DeFi projects are are more risky than Ponzi schemes. In addition to expected exit-scam by project founders they can be unexpectedly hacked by external players. https://t.co/L6lj6v4DVJ
— ʲᵒᵉ🕶️7 (@J0E007) July 19, 2020
Earlier this year, decentralized finance protocols that let users lend and borrow cryptoassets were exploited via so-called flash loans: loans taken and repaid in the same transaction. CryptoGlobe reported that in April dForce was exploited or nearly $25 million, which the hacker later on return. In June, Balancer was exploited for over $450,000.
The crypto whale, which rose to prominence for being on top of Bitfinex’s leaderboard while holding massive positions on the price of bitcoin, also commented on the launch of Curve finance’s YFI token, a “worthless token” developed as part of the project yEarn, developed by one man, Andre Cronje.
The token’s price started moving up as soon as trading kicked off on it, moving up over 4,000% in a single day. The token can be earned by providing liquidity to various DeFi platforms and allows its holders to vote on system parameters for yEarn, which automates the process of finding the highest yield among other DeFi platforms.
When it was announced, Cronje claimed the token was “worthless,” but after being listed on decentralized exchanges Uniswap and Balancer it has taken off, going from $30 to an all-time high of $2,300. The total value locked on yEarn, it’s worth noting, moved from $8 million to $147 million over roughly the same period.
Joe007 nevertheless pointed to the token’s rise to claim DeFi is a new term to describe Ponzi schemes.
I'm really confused here, please help me out guys. Why do we need this shiny new term “DeFi” when we already have a perfectly valid term “Ponzi”?
— ʲᵒᵉ🕶️7 (@J0E007) July 19, 2020
In other tweets, Joe007 argued that even if some altcoins projects manage to innovate in the cryptocurrency space, these innovations “will ultimately benefit bitcoin.”
Photo by Iswanto Arif on Unsplash
