DeFi’s Tough Choice: Staying Decentralized While Following Rules
Decentralized finance, or DeFi, is like a new kind of bank that’s open to everyone. It promises to give us control over our money and make it easy for us to use. But, as rules and laws get stricter, DeFi is facing a big problem. To follow these rules, it has to change how it works, which might make it less decentralized. Let’s find out more about this tricky situation.
The Rules Challenge
DeFi uses something called blockchain, which works without a boss telling it what to do. It uses something called smart contracts to help with money stuff. But, following rules can be hard because these rules often need someone to be in charge of collecting and sharing information[1]. A vote in the U.S. Senate showed this problem when they talked about treating DeFi like a bank[1]. Some people think these rules don’t understand how DeFi works and might stop it from growing[1].
Uncertain Rules
The rules for DeFi are hard to understand and keep changing. This makes it hard for DeFi to know what to do. If it doesn’t follow the rules, it could get into big trouble[5]. So, DeFi has to find a way to follow the rules without losing its decentralized spirit.
Keeping Money Safe
Besides rules, DeFi also has to worry about keeping our money safe. There are bad guys who might try to steal our money or break into the system[5]. Following rules can help keep our money safe, but it also makes it harder to stay decentralized.
How Rules Change DeFi
Following rules can make DeFi change how it works. For example, it might need to keep more information about us, which is the opposite of what DeFi is about[5]. This change can make DeFi less free and private.
A Better Way: The D.A.T.A. Framework
There’s a plan called the D.A.T.A. Framework that might help. It uses something called AI to help with rules without making DeFi less decentralized[3]. It helps keep our information safe while still following the rules.
The Future of DeFi
As DeFi keeps changing, it’s important to find a way to follow rules without losing its decentralized spirit. Following rules is important to keep our money safe, but it’s also important to stay true to what DeFi is about. The future of DeFi depends on finding a good balance between these two things.
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Sources:
– crowdfundinsider.com
– onesafe.io
– foundershield.com