Crypto’s “Be Your Own Bank” Appeal Needs To Extend To DeFi

Various DeFi platforms provide access to DeFi solutions and promise high returns and a seamless experience. However, these platforms are often centralized and will be in control of user funds, instead of the other way around. Users need to be in control and be their own bank, rather than relying on the “goodwill” of centralized entities that do not have the user’s best interests at heart. 

What happened to “Be Your Own Bank”?

People who have been involved in cryptocurrency for over a decade will remember how crypto was touted to the masses initially. The concept still holds true today, as crypto assets let anyone be their own bank. Holding cryptocurrency means you, the user, can use that money how you see fit without requiring approval from intermediaries. It is your money, and only you control the private key to confirm ownership of that money. 

Unfortunately, many people still don’t take these crucial values to heart. Instead, they keep funds on centralized exchanges and then act surprised when the exchange won’t let them access funds. That back-and-forth has been going on for nearly a decade, and one would think people learned their lessons from it. Sadly, that doesn’t appear to be the case as the same cycle repeats itself in decentralized finance today.

Like these centralized exchanges, crypto platforms like Celsius, BlockFi, and Voyager Digital pull the strings. They claim users can access decentralized finance, but only through explicit approval by these providers. As all these companies now prevent users from depositing, withdrawing, and trading funds, many uneasy questions must be answered. No one knows how things will move forward, yet users should not have put their faith in these centralized providers. 

Custodians and trust-based centralized entities do not embody the values of decentralized finance. They take unnecessary risks with user assets to provide high yields, yet those risks will not go unpunished. Instead, decentralized finance revolves around transparency, accessibility, and on-chain actions. Various projects embrace the peer-to-peer nature of DeFi properly, and they will drive self-sovereignty to new levels. 

Take control to be in control

Many people flock to DeFi in search of high rewards, even if that involves taking bigger risks. However, those risks should never involve requiring third-party approval to access the money you contributed to a DeFi protocol. Instead, users need to take control by only relying on permissionless solutions without intermediaries, as decentralized exchanges offer a similar experience.

While Celsius and BlockFi may provide access to DeFi products and services, there are some significant trade-offs to consider. More specifically, they leverage smart contracts for swaps and trading but still control who gets to access funds and when. The result is over $5 billion in customer assets being unusable until these companies get their act together again. 

Thankfully, there is a growing landscape of self-sovereign DeFi solutions with no interest in exerting control over users or their funds. Some of these solutions exist on the Bitcoin network – including Sovryn, Money On-Chain, or Portal, a self-hosted and non-custodial Layer-2 DEX and wallet with zero-knowledge cross-chain swaps and censorship-resistant communications – and other blockchains through solutions like Connext, DeversiFi, Loopring, etc. Most of these projects have been around for a while, yet people tend to ignore things that don’t offer them unrealistic returns without taking unwarranted risks. 

Anyone who takes decentralized finance seriously – either as a builder or user – needs to prioritize self-sovereignty and security. The platforms outlined above all do that job well, yet there is still much room for broader market participation and competition. Users are the ones that can make or break DeFi protocols, yet the opposite is true today through the Celsius and Voyagers of the world. That needs to change sooner rather than later.