DeFi Protocols Should Act More Like Fiduciaries

DeFi Protocols Should Act More Like Fiduciaries

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Lex Sokolin, a CoinDesk columnist, is Global Fintech co-head at ConsenSys, a Brooklyn, N.Y.-based blockchain software company. The following is adapted from his newsletter.

This week, I grapple with the concepts of financial centralization and decentralization, anchoring around custody, staking and DeFi. 

On the centralized side, we look at , Coinbase Custody and its similarity to Schwab and Betterment Institutional. 

On the decentralized side, we examine the recent within the Compound protocol, as well as the recursive loops that could pose a broader financial risk to the ecosystem.

It is a difficult one for me to untangle, in part because I am not sure for what audience I am writing. Ever since starting to work more deeply in the crypto ecosystem, I’ve come across a very different set of norms and expectations in the financial industry and the fintech startup community. Notably, crypto builders champion software that is “trustless,” “decentralized” and “permissionless.” This creates a worldview towards incumbent money and financial products that does not merely wish to reform them, but to abandon them all together. In turn, this community is also far more authentic in trying to change the world.

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