Talk:Decentralized finance

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For accuracy and to briefly provide additional information, in the first part of the #History section, change wording from:

MakerDAO is credited with being the first DeFi platform focused on stablecoins. It allows people to take out loans of their stablecoin, Dai, and seeks to keep the price of Dai pegged to the U.S. dollar in a decentralized manner.

to:

MakerDAO's stablecoin-based lending platform is credited with being the first DeFi application to receive significant use. It allows users to borrow, Dai, the platform's native token pegged to the US dollar. Through a set of smart contracts on the Ethereum blockchain, which govern the loan, repayment, and liquidation processes, MakerDAO aims to maintain the stable value of Dai in a decentralized and autonomous manner.^[1][2]

^Hidden_{Lemon /}^{/ talk} 20:07, 26 January 2021 (UTC)

 Not done: Marketing copy that does not comply with the Core Content Policies or WP:NOTPROMO and does not add to understanding. Eggishorn (talk) (contrib) 23:39, 1 February 2021 (UTC)

@Eggishorn: Elaborate? I’m not marketing anything. I’ve provided sources for the abbreviated description based on the major cleanup of POV, undue weight, promotion, etc. that I recently did on Dai (cryptocurrency). Given the significance of MakerDAO/Dai in the history and origin of the topic (as verified by sources) I can’t imagine my moderately-sized expansion could be considered undue weight.

To be frank, if potentially productive, policy-conforming, and useful edit requests are just going to be seen as spam or promotional by default, then, IMO, the extended protection isn’t justifiable as a means to its intended purpose; aka, WP:Assume good faith.
^Hidden_{Lemon /}^{/ talk} 01:48, 2 February 2021 (UTC)

The irony is that the reason I decided to submit a request to edit this snippet was because it’s the only section that still has a remnant of leftover changes from the vandalism that led to this page’s protection. ^Hidden_{Lemon /}^{/ talk} 01:55, 2 February 2021 (UTC)

I agree with Hidden Lemon. I don't see how the proposed edit above is promotional at all. It simply elaborates on how MakerDAO functions. I have no problem with this being added to the article. HocusPocus00 (talk) 20:51, 3 February 2021 (UTC)

Thanks, I just reactivated the edit request as I didn't realize the template had a resolved/answered parameter. ^Hidden_{Lemon /}^{/ talk} 23:26, 3 February 2021 (UTC)

 Done Hi Hidden Lemon all done. Cheers, Skingo12 (talk) 12:06, 4 February 2021 (UTC)

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Would like to add a well written article quite easy to understand on "What is Defi?" Author - Thorsten Burger Link: https://crypthor.net/what-is-defi-decentralized-finance-2021/ Title "What is Defi?"

Thank you very much Karsten Begrer (talk) 14:55, 29 January 2021 (UTC)

 Not done: it's not clear what changes you want to be made. Please mention the specific changes in a "change X to Y" format and provide a reliable source if appropriate. Dr. Swag Lord (talk) 06:29, 31 January 2021 (UTC)

This edit request by an editor with a conflict of interest has now been answered.

Hi all, I'm A at Chainlink and I've been paid by Chainlink Labs. I won't make any edits to this page myself to remain compliant with COI rules and have disclosed my COI above. I have two some suggestions to improve this page (suggested edits bolded below):

1) The last update on DeFi's size dates back to January 2021. Since then, the space has grown significantly, so I suggest adding the following to the end of the introductory paragraph:

In October 2021, DeFi's total valuation exceeded $100 billion.^[1]

2) Smart contracts, as well as all of the major dApps referenced in the 'Key Characteristics' section, rely on blockchain oracles to access external data, as blockchains cannot connect to external data (which includes the price data that powers DeFi) on their own. My suggested edit is to the second paragraph:

DApps are typically accessed through a Web3 enabled browser extension or application, such as MetaMask, which allows users to directly interact with the Ethereum blockchain through a digital wallet.[15][16] Many of these DApps can interoperate to create complex financial services.[1] For example, stablecoin holders can lend assets like USD Coin or DAI to a liquidity pool in a borrow/lending protocol like Aave, and allow others to borrow those digital assets by depositing their own collateral, typically more than the amount of the loan.[17] The protocol automatically adjusts interest rates based on the moment-to-moment demand for the asset.[3] Many DApps source external (off-chain) data, such as the price of an asset, through blockchain oracles. ^[2]

Happy to address any changes/issues as necessary, and thanks very much in advance for your help and consideration. A at Chainlink (talk) 20:37, 3 December 2021 (UTC)

@A at Chainlink: 1.  Done with tweaks. 2.  Done with small tweaks. JBchrch talk 21:11, 3 December 2021 (UTC)

@JBchrch: Thank you! Appreciate your help. A at Chainlink (talk) 15:35, 6 December 2021 (UTC)

Will you correct this article. The creator of De-Fi is Reggie Middleton. If you're going to put out information you owe it to everyone to be factually correct. 2600:1004:B0BC:B3ED:7D72:B1A3:51CE:4016 (talk) 06:43, 14 December 2021 (UTC)

At best you could argue that he's made that claim, as the only sources on google that support this claim appear to be his press releases, whether it is sensible to believe anything he says is another question entirely, to which I believe the answer is a definitive no: https://www.sec.gov/divisions/enforce/claims/reginald-middleton.htm 50.232.188.150 (talk) 05:03, 18 July 2022 (UTC)

The table in question has been added thrice and removed twice. Having read the pages on dispute resolution and B.R.D. 5 minutes ago, talk page seems like the right next step.

I think the table in question overgeneralises both DeFi and TradFi. e.g. costs of service is "low" for DeFi despite >=$3.00USD transaction fees on Eth being much greater than e.g. 2% CC fees for transactions under ~$150, TradFi being "low" in anonymity despite cash being very hard to trace, trustless for DeFi being "high" despite many people being locked out of withdrawals during bear markets because they trusted and deposited with a company afraid of a bank run, yada yada yada.

The data is also just intensely against wikipedia's manual of style, the row headers are vague, entirely unexplained, and often have strong positive connotations that favor DeFi (e.g. flexibility, inclusive, transparent...)

The source, which this seems to copy 1:1, is "Patrick Schueffel", who from a cursory search is first and foremost a cryptocurrency evangelist.

I hope someone reads this. Mandudeguyfella (talk) 12:14, 13 July 2022 (UTC)

As the editor who originally deleted that table, I agree completely. It's just plain wrong and the most recent restoration cites off wiki canvassing by the "paper's" author at: https://www.linkedin.com/posts/patrick-schueffel_defi-wikipedia-decentralizedfinance-activity-6949571549871923200-9QQm?utm_source=linkedin_share&utm_medium=member_desktop_web

On a point by point basis:

Degree of automation (Just no, sub-millisecond high speed trading vs 10-19 seconds on Ethereum, also you can only automate on-chain if you want the entire world to know what you are going to do.)

Network Structure (not really true as can be seen in several of the recent meltdowns)

Product Focus (what does this even mean????)

Self-custodial (I can store cash under my bed, also virtually no one actually keeps crypto in their own wallets because its too inconvenient and expensive to conduct transactions in)

Intermediary importance (This is backwards, If whatever chain your money is on stops, you're SOL its not coming back, if my Bank's president blows all my money on cocaine, its still insured by the FDIC.)

Costs of service (hmmm... $5 Ethereum fee for a cup of coffee a year ago vs a couple cents for credit card processing)

Technology importance (Correct... but I'm pretty sure this is a good thing, as we've seen CODE=LAW mostly just results in people losing money.)

Trustless (Explain to me why anyone actually wants this)

Single Point of failure (Not even close to correct, if a bank messes something up there are multiple banks with copies of the records and if that doesn't help there are effective systems of law for solving problems.)

Counterparty risk (If crypto could actually solve counterparty risk there wouldn't be millions of people scammed on it every day, in reality irreversible pseudonymous transactions magnify counterparty risk whenever something happens off chain.)

Anonymous (more anonymous than cash? I don't think so)

Inclusive (except for most of the people in the world that don't have reliable internet access)

Transparent (except for all the parts that aren't like Tether, also transparency sucks for really applications where you don't want your competitors, vendors, or suppliers to know every single detail of your finances)

Open Source (more true than most of the items in this table, still of debatable value when most participants don't bother to check it until after it all blows up.)

Permissionless (I guess in the sense that it gives you the ability to accidentally and irreversibly chmod 000 your money)

Flexibility (What? Flexible financial systems tend to actually support activities beyond internal use, like buying food and housing)

Security (This is just laughable, and good luck rolling anything back when you get robbed. (unless the developers also got robbed))

Regulated (Wow something that is banned in many entire countries is totally unregulated.)

So I would conclude that most of the items on the list are wrong and the remaining few aren't actually desirable, and if Wikipedia is actually going to have a comparison it should go into more detail than this disaster of a table.

Additionally on the LinkedIn post, there are complaints about not respecting the 'journal,' for reference the journal is literally "JIM: Journal of Innovation Management: The International Journal on Multidisciplinary Approaches on Innovation." I would suggest that perhaps it simply doesn't have enough meaningless business buzzwords in the title, perhaps if they added 'synergy, agile, bandwidth, and alignment' to their name they would be more credible. Though, frankly publishing the referenced letter at all was enough for me to question their credibility. Additionally reading though their tables of contents doesn't inspire much more confidence either: https://journalsojs3.fe.up.pt/index.php/jim/issue/view/2183-0606_009-001 Some of the article titles remind me of the Social Text/Sokal affair.

Perhaps this article could use a bit of attention from @GorillaWarfare or @David Gerard. 50.232.188.150 (talk) 21:28, 16 July 2022 (UTC)

o gawd what a not so great article.

Currently working on a commission - my WP editing has dropped off precipitously 'cos the crypto crash means I have a buttload of other stuff to get written - but I concur that this article needs ... a top-to-bottom revision.

At least there's enough coverage of the concept of DeFi in proper RSes - David Gerard (talk) 22:34, 16 July 2022 (UTC)

I saw on the LinkedIn post I linked above that co-editor in chief Anne-Laure Mention would like criticism of the article, and it seems her comment was directed at me in particular. This may be construed as my response:

Frankly I don't have enough respect the for your journal to properly dissect this letter, however the fact that it managed to make it to publication with a table as bad as the one in question (more than half the entrees are reversed) really causes me to question the legitimacy of any peer review process you would claim to have/the competency of your reviewers. Additionally in his response Mr. Schueffel claims that he could not possibly have known of the scale of the fraud problem in DeFi when the article was published. This is obviously false, as his 2019 paper "Cryptocurrencies & Initial Coin Offerings: Are they scams?-an empirical study" in the even less legitimate sounding "The Journal of The British Blockchain Association" discusses among others the multibillion dollar Ponzi scheme Bitconnect. As a supposed subject matter expert he should also have been aware of other massive thefts and frauds in the sector including MtGox and Tether. But the end of the day from what I can tell "Innovation Management" is an unholy combination of the slurs on both teachers and management that: 'Those who can, do; those who can't, teach/manage.' or in this case get PhDs and pretend to study it instead of actually.... you know.... innovating or managing. This the kind of nonsense that creates MBA managers that drive the best engineers and scientists away from their own organizations. Frankly as someone in a STEM field, I wouldn't work for anyone who published in or edited your journal or any of the so many others like it. 50.232.188.150 (talk) 09:26, 17 July 2022 (UTC)

Schueffel is a "cryptocurrency evangelist" - ha, ha, you made my day! Either you have not the faintest idea of the meaning of an evangelist or you're just a total moron. in any case, your attempted cursory search reveals your stupidity!🤣 178.193.201.32 (talk) 17:11, 28 July 2022 (UTC)

Duck test... Did you even look at his (or are you really him?) LinkedIn page? He literally sits on the boards of cryptocurrency industry groups. He has published in The Journal of The British Blockchain Association and is a reviewer for them as well. His twitter feed give a very similar vibe. I've met religious evangelists that express more skepticism about their own religion than this guy.

On your post history, I also note that other than this comment the only other thing you've been doing on wikipedia is citation spamming Schueffel sources, do you have a conflict of interest you need to disclose? 50.232.188.150 (talk) 04:02, 31 July 2022 (UTC)

Ha, that's nothing, in Dec 2022, with BTC down 80% from high, and yet more new and exciting disasters, that genius wrote "#DeFi has never sinned" https://twitter.com/schueffel/status/1605434663606050817 https://ghostarchive.org/archive/mJVvF SnoFoot (talk) 19:16, 12 March 2023 (UTC)

This article was the subject of a Wiki Education Foundation-supported course assignment, between 21 September 2022 and 8 December 2022. Further details are available on the course page. Student editor(s): Ruizhouruizhou (article contribs).

— Assignment last updated by Ruizhouruizhou (talk) 09:06, 23 November 2022 (UTC)

This article was the subject of a Wiki Education Foundation-supported course assignment, between 22 September 2022 and 8 December 2022. Further details are available on the course page. Student editor(s): BL33701 (article contribs).

— Assignment last updated by XingboGao (talk) 13:43, 8 December 2022 (UTC)

I'd push back against the wording on 'incompetent developers' in that section (unless it was quoted from a reputable external source). Curious what this page's maintainers think.

Many defi protocols are relatively new software and ideas, especially the implementation details on the specific blockchain. Experimental smart contract needs software testing in a production environment to simulate real-world scenarios (stress testing) to make it past the experimental stage. The fact that transactions on-chain are non-reversible and application 'security' of 99.9% being a failing grade, incompetent seems harsh and unnecessary.

Of course, there are prudent ways to testing when economic risks are involved. Responsible testing can be achieved by imposing hard limits on the total number of users / funds used early on etc, to cap maximum downside of the 'defi experiment'. A cautious and responsible approach can improve the software’s reliability and resilience, crucial for its eventual success. Bigz pubkey (talk) 01:17, 7 May 2023 (UTC)

Wikipedia isn't a platform for original research. Wikipedia also isn't a platform for public relations or advocacy. Sources specifically cite developer incompetence, so that's what the article says. At this point, sources do not even define what the "eventual success" of defi would even look like. Grayfell (talk) 03:05, 7 May 2023 (UTC)

thank you, I didn't see it in the source cited and figured it was a subjective decision to include. Given the source is stale and led to this confusion, think its good to be updated to avoid confusion. maybe even specifically for that word

https://atlasvpn.com/blog/defi-related-hacks-account-for-76-of-all-major-hacks-in-2021 Bigz pubkey (talk) 14:15, 7 May 2023 (UTC)

See WP:SECONDARY. Our goal is to summarize sources, and multiple sources mentions this concept, even if only some use this particular word. Grayfell (talk) 21:52, 10 May 2023 (UTC)

I'm attempting to add background about the invention of flash loans to the Key Characteristics section of this article. It is difficult to satisfy other editors' requirements, but I am 100% certain that this information is both correct and verifiable (I am a primary source otherwise unworthy of note here and simply wish to offer the best account of the historical record on this matter and properly credit the inventors of an impactful technology). The reversion suggested asking other editors for appropriate wording that satisfies the stringent quality bar here. Any suggestions? Diff here. 2601:645:C600:BD60:55F4:8ED1:921A:A386 (talk) 14:38, 25 August 2024 (UTC)

Hello, I propose adding the following sentence to the end of the “Key characteristics” section:

Proposed text:

"DeFi has also expanded into entertainment sectors through decentralized gambling and gaming protocols. These platforms allow users to participate in games of chance or skill with transparent, on-chain mechanics, often leveraging provably fair systems and token incentives." Senorwolferoni (talk) 15:29, 25 April 2025 (UTC)

This is unsourced and far too promotionally written. Grayfell (talk) 19:21, 25 April 2025 (UTC)

Hey, I am new to doing this and am learning. Here are sources to back up the statement I made. Could you please tell me how it was promotionally written though. I feel I made a factual statement about mechanics and in that statement tthere is no promotion to anyone in it. Just a description of the mechanic.

Please bare with me as I am learning and appreciate constructive critique so that I can do better in the future.

Here are some sources and their relevance to defi and the support for the statements I made about provably fair systems and token incentives.

Source 1:

https://www.investopedia.com/decentralized-finance-defi-5113835

Relevance: This source explicitly mentions DeFi's involvement in gambling and prediction markets, stating, "Every day, millions of dollars in cryptocurrency are used in DeFi gambling and prediction apps like Polymarket, ZKasino, Horse Racing Slot Keno Roulett, Azuro, and JuicyBet." It highlights how DeFi platforms facilitate gambling activities, which aligns with the statement’s reference to decentralized gambling protocols.

Support for Provably Fair Systems: While not directly mentioning "provably fair" systems, the source discusses the transparency and blockchain-based nature of DeFi, which are foundational to provably fair mechanics.

Support for Token Incentives: The source does not explicitly discuss token incentives but implies financial incentives through the use of cryptocurrencies in these platforms, which often involve token-based rewards.

Source 2:

https://www.rapidinnovation.io/post/decentralized-finance-defi-and-gamefi-pioneering-the-next-wave-of-blockchain-innovation-in-2024

Relevance: This source discusses GameFi, a subset of DeFi that integrates financial incentives into gaming. It states, "GameFi, a fusion of gaming and decentralized finance (DeFi), has revolutionized the gaming industry by integrating blockchain technology and financial incentives." This directly supports the statement’s claim about DeFi expanding into gaming with transparent, on-chain mechanics.

Support for Provably Fair Systems: The source emphasizes blockchain’s role in ensuring "transparency, security, and decentralization" through smart contracts, which are key to provably fair systems.

Support for Token Incentives: It explicitly mentions "play-to-earn (P2E) models" where players earn cryptocurrency or NFTs, such as in Axie Infinity, where players earn Smooth Love Potion (SLP) tokens. This supports the use of token incentives in decentralized gaming protocols.

Source 3:

https://coinpedia.org/press-release/smart-contracts-and-provably-fair-gaming/

Relevance: This source directly addresses decentralized gambling platforms, stating, "Decentralized gaming platforms are run by users who earn token rewards for participating." It also discusses how smart contracts and provably fair gaming technologies ensure fairness in online gaming, aligning with the statement’s focus on transparent, on-chain mechanics.

Support for Provably Fair Systems: The source explicitly defines "provably fair gaming" as an approach where "casinos can demonstrate that each game’s outcome is random and fair for every participant and external party," using cryptographic algorithms and blockchain technology.

Support for Token Incentives: It mentions that users earn token rewards for participating in decentralized gaming platforms and highlights collectibles (e.g., NFTs) that provide "additional incentives and opportunities to players."

https://medium.com/%40NeoNomadFinance/transforming-the-crypto-and-defi-landscape-the-power-of-gamification-9cdef0c6af43

Relevance: This source discusses the gamification of DeFi, including decentralized prediction markets and betting platforms, which are forms of decentralized gambling. It states, "Predictive Markets and Betting: Introduce decentralized prediction markets or betting platforms, enabling users to speculate or stake tokens on the outcome of future events, creating an interactive gaming-like experience."

Support for Provably Fair Systems: While not explicitly mentioning "provably fair," it emphasizes the role of smart contracts in ensuring security and trust, which are critical for transparent, on-chain mechanics.

Support for Token Incentives: The source highlights mechanisms like "yield farming and liquidity mining" and "token governance and voting," where users earn rewards or participate in decision-making using tokens, directly supporting the statement’s reference to token incentives.

Look forward to hearing thoughts. Senorwolferoni (talk) 05:34, 26 April 2025 (UTC)

None of these are reliable sources. See WP:INVESTOPEDIA. The rest are various forms of PR and corporate blogs. Wikipedia isn't a platform for promotion. Start from reliable sources and work from there. Do not add buzzwords or business cliches to promote gambling on Wikipedia. Grayfell (talk) 08:52, 26 April 2025 (UTC)

understood. going to re-write/re-try this and do a new suggestion when i feel what i have is ready.

Do I need to 'close' this thread in some way? or all good.

Thank you Senorwolferoni (talk) 21:06, 26 April 2025 (UTC)