CFTC’s Tech Committee Hosts Crash Course On DeFi
Earlier in the week, executives from the crypto industry provided a crash course on decentralized finance (DeFi) to the US commodities regulator. The briefing covered important topics relevant to the DeFi space, such as digital identities, exploits, and decentralization.
CFTC Execs And Crypto Experts Discuss DeFi
During the inaugural meeting of the regulator’s Technology Advisory Committee (TAC) held in Washington, DC, representatives from the crypto industry gave presentations to address crucial issues affecting DeFi. Christy Goldsmith Romero, the CFTC Commissioner, kick-started the meeting by delivering a prepared speech emphasizing the significance of comprehending the workings of DeFi.
She stated that policymakers and regulators are currently making decisions regarding DeFi, making it important to understand the concept. Ari Redbord, Head of Legal and Government Affairs at TRM Labs, a blockchain intelligence firm, kicked off the panel by providing detailed explanations about blockchain technology and DeFi.
He highlighted the potential advantages of blockchains, including transparency, immutability, and privacy. Redbord further noted that this technology could aid regulators in balancing security with individuals’ privacy rights.
Ari Redbord and Nikos Andrikogiannopoulos, Metrika founders, jointly discussed the benefits and challenges of decentralization. They shared their views on the current state of decentralization, highlighting the potential benefits and issues.
After a thorough discussion, they concluded that the benefits of decentralization far exceed its challenges. They further expressed their belief that the challenges would resolve themselves over time.
“Decentralization has become too important to ignore at this point. It is not a matter of accepting it; rather, I believe we must guide it towards the right track,” Andrikogiannopoulos said.
The Issue Of Exploits In The DeFi Space
Redbord pointed out that the total value infused into DeFi over the past two years has been subjected to rigorous testing, as demonstrated during the FTX saga, but the sector has remained resilient. As such, he firmly believes that DeFi is a permanent fixture in the financial landscape.
According to DefiLlama, the total value locked in DeFi has surged from approximately $15 billion in early January 2021 to roughly $49.1 billion. In addition, Jill Gunter, the CSO of Espresso Systems, and Carole House, an executive at Terranet Ventures, provided an overview of the present-day noncustodial wallet and digital identity solutions.
Gunter made special mentions of the MetaMask wallet and Ethereum Name Service. Furthermore, Michael Shaulov, the founder of Fireblocks, and Dan Guido, the founder of Trail of Bits, highlighted the ongoing exploits and vulnerabilities that plague the cryptocurrency market.
According to Guido, the numerous publicized hacks are typically discovered by external entities such as users and other companies before the affected firms become aware of them. As a result, he urged crypto firms to improve their security measures continually.
In 2022, the top 10 exploits in the crypto industry alone resulted in over $2 billion loss. Of the 167 exploits during the year, 113 were directed at DeFi, causing significant damage to the sector.
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