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November 10, 2020

DeFi Convention

Why some DeFi returns are rational and others are irrational with Melonport


Mona El Isa, founder & CEO of Melonport, has been in the crypto space for five or six years after spending much of her career in traditional finance, including as a trader for Goldman Sachs. Melonport is behind a protocol for decentralized on-chain asset management designed to let fund managers focus on investing. She explained that not all DeFi is the same, saying —

(33:57) “First of all, I want to just make something very clear. There is a spectrum of decentralization, right? It’s not that you are either decentralized or centralized. And there is also on that spectrum a tradeoff. The more decentralized you are, sometimes the less efficient you are. Decision making is slower. Results can be slower…The more decentralized you get on the other side, the more secure a system becomes and the less subject to attack or malicious attack or failure a system is as well. So you need to think very carefully. When you’re looking at the space, it’s not just oh, we’re kind of at this one extreme. But I want to make it very clear there is a spectrum. And it doesn’t always make sense for everyone to decentralize everything.”

Melonport’s El Isa also addressed the astounding returns that the DeFi space has been delivering.

(36:22) “What about the returns in DeFi? A lot of them are irrational, I’m not going to lie. And some of them are rational. There are some very exciting things happening. You can earn yields…for example, you can earn up to 6% interest on a digital dollar, lending a digital dollar today…a decentralized digital dollar, which you can’t do in traditional finance.”

Daniel Yanev, COO at DiversiFi, started the firm with a team of alum from Ethfinex, a subsidiary of Bitfinex. Their solution allows professional traders in the DeFi market to trade quickly without having to be slowed down by congestion on the network. Yanev spoke about the hype in the DeFi markets, saying it’s not all bad:

(37:29) “There is a level of hype there…However, I think there are also a few positive things about DeFi compared to hype cycles in the past; the first one being that there is a lot of hype around things right now but it is generally all around existing products. So things are hyped but that is because they are real things that work and they create some value. Now do people speculate that the value is higher than it is? Maybe, but you know it’s not just the white paper. In terms of security…I think over the last year DeFi has kind of matured quite a bit in terms of auditing practices but also in terms of disclosing vulnerabilities. I think there’s now an expectation in the industry of how these things are disclosed rather than people keeping it quiet and trying to hide the fact that there is a vulnerability.”

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Gerelyn Terzo
Gerelyn caught wind of bitcoin in mid-2017 and after learning about the peer-to-peer nature of Satoshi's creation has never looked back. Previously she covered institutional investing and fintech for several major trade publications. Gerelyn resides in Verona, N.J.

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