Is the DeFi industry getting more and more popular? A comprehensive review of the "fighting" incidents in the DeFi industry

This article is from Bitcoin.com, the original author is: Terence Zimwara

Odaily Planet Daily Translator | Moni

Unless the leaders of major projects in the DeFi community stop tearing each other apart, the final outcome of this emerging industry is likely to be "implosion."

If we look at the tweets of the most influential “big names” in the DeFi industry on Twitter, we will find that they are full of various attacks on each other, such as:

1. Wave blockchain creator Sasha Ivanov previously described the DeFi ecosystem as "Ponzi Scheme 2.0," after which the industry launched an incentive debate over "Ponzi Scheme 2.0" vs. "Financial Services 2.0";

2. Sam Bankman-Fried (SBF), the current head of another decentralized financial project Sushiswap, also posted on Twitter, expressing his concerns about "food" tokens. He believes that these tokens are actually spreading the DeFi bubble, which also sparked heated discussions in the community;

3. There is also Andre Cronje, the creator of Yearn Finance, who started a topic on Twitter about the excessive fragmentation of liquidity, which has caused the decentralized financial industry to face various challenges.

4. The recent "mutual tearing" incident that has attracted industry attention is the dispute between the anonymous founder of yieldfarming.insure, Insurance Chef, and investor Azeem Ahmad.

It is undeniable that the rapid development of the DeFi market has won widespread recognition and attention, but despite this, the DeFi community's voice still seems to be controlled by some opinion leaders and core project personnel. This situation was fully demonstrated when Sasha Ivanov criticized the automated market maker (AMM).

Wave founder Sasha Ivanov vs. YFI founder Andre Cronje

Although a considerable part of the DeFi industry believes that automated market makers are a good solution, Sasha Ivanov insisted in a tweet that "Finance 2.0" will eventually appear, so automated market makers are not a real solution. He explained:

“Automated market makers are not as groundbreaking as liquidity pools, which are great in my opinion, but automated market makers are not there yet, no matter how high the volumes are.”

(For those who don’t know much about automated market makers, here is a simple explanation. Automated market makers are entities responsible for creating price behavior on exchanges. For exchanges, if there is no trading behavior, there is no liquidity.)

Before making harsh criticisms of automated market makers, the “optimistic” Sasha Ivanov also recommended some projects on Twitter that he believed were truly groundbreaking, such as Aave, Curve, etc., but people with a discerning eye noticed that Sasha Ivanov did not mention YFI in his recommendation list - this seemed to annoy YFI founder Andre Cronje.

Soon, Andre Cronje gave an "indirect response" to Sasha Ivanov's remarks. As the creator of Yearn Finance, Andre Cronje has made an indelible contribution to the development of the DeFi industry to the tens of billions of dollars. Just a few hours after Sasha Ivanov posted a tweet that "Automated Market Makers are not groundbreaking", Andre Cronje also posted a tweet explaining why the decentralized financial industry needs automated market makers. He pointed out:

“Liquidity in the decentralized financial market is becoming extremely fragmented. Liquidity providers must make a lot of judgments and choices between asset pairs. The higher the degree of fragmentation, the higher the cost (slippage + gas fees). Therefore, we must now have automated market makers to provide investors with single asset exposure and more affordable exchange transactions by expanding 1…n pools of liquidity.”

YFI founder Andre Cronje vs. "Sushi" Sushiswap head SBF

Although YFI founder Andre Cronje and Wave founder Sasha Ivanov disagree on some issues, they actually have some common views, namely: the DeFi industry is being occupied by "bad guys." Andre Cronje complained in his earlier tweet that the controversy surrounding Sushiswap has "made the DeFi industry a joke again."

The reason why Andre Cronje made such shocking remarks is mainly due to a series of incredible behaviors of the anonymous founder of Sushiswap, "Chef Nomi". About three or four weeks ago, "Chef Nomi" suddenly exchanged millions of SUSHI tokens he held for ETH, causing the overall liquidity of his platform to drop sharply in an instant. For many DeFi projects, it is very difficult to understand why the founders do this, because this practice usually brings a fatal blow to the project itself, and will damage the confidence of the crypto community in the project, bringing irreversible consequences to the future development of the project.

As expected, right after Chef Nomi cashed out, the price of SUSHI tokens plummeted from 5.05 USDT to 1.3 USDT that day, after which he/she was "forced" to announce the abandonment of control of Sushiswap and handed over this power to FTX founder Sam Bankman-Fried (SBF). Even though Chef Nomi later announced that all previously cashed-out ETH tokens would be returned to the community and used to repurchase SUSHI tokens in an attempt to restore the community's confidence in the project, the results seemed to be ineffective.

Andre Cronje bluntly criticized on Twitter that the "Sushi" Sushiswap project took one step forward and then took ten steps back.

Perhaps Andre Cronje’s words were too blunt, prompting Sam Bankman-Fried, the current head of Sushiswap, to respond. In his post, he criticized the yield farming “food” tokens and asked three questions in a row:

1. Is yield farming sustainable?

2. Is yield farming stupid?

3. Is yield farming really revolutionary?

Sam Bankman-Fried tried to defend some DeFi tokens that he believed had "clear utility". Like Sasha Ivanov, Sam Bankman-Fried also listed some overlooked but important yield farming projects/protocols, including Compound Finance, Aave, and Balancer. Sam Bankman-Fried specifically mentioned two DeFi projects, Sushiswap and Creamdot Finance, and called them "the most useful forked products."

Not only that, Sam Bankman-Fried also turned his guns and criticized Andre Cronje's project YFI. He said, "YFI is a strange case. At present, YFI is mainly farming. It has almost become the king of yield farming. It has become a kind of 'meta-farming' token, so it seems reasonable to get due returns from it." (Note from the Planet: At the time of writing this article, according to Coingecko data, the price of YFI was US$29,531.)

yieldfarming.insure founder Insurance Chef vs. investor Azeem Ahmed

The DeFi insurance mining platform yieldfarming.insurance was created by anonymous developer Insurance Chef. The platform supports two types of NFT assets: yNFT (ETH) and yNFT (DAI), which are insurance policies for ETH and DAI respectively. yieldfarming.insurance is underwritten by Nexus Mutual, and the insurance policy is NFTized in the ERC-721 token format. The generated asset is called yNFT. It allows users to pledge yNFT tokens from yInsure, Rarible, and Nexus Mutuats (WNXM). This token can act as a liquidity provider (LP) token on the platform, and then used for yield farming to obtain yieldfarming.insurance's native governance token SAFE.

However, due to the discord between Insurance Chef and project investor Azeem Ahmed, the fourth liquidity pool of SAFE tokens was not properly deployed in Balancer, resulting in 10,000 SAFE tokens being accidentally permanently locked in the smart contract. Not only that, Insurance Chef also found that Azeem Ahmed violated the original intention of the project and put his SAFE tokens on the market for trading, and had already earned millions of dollars through the SAFE agreement in the early days of the yNFT secondary market listing on Rarible. He even listed several other "crimes" of Azeem Ahmed, including:

1. Azeem Ahmed brought in many VCs/whales and decided to run the protocol in his own way, forcing Insurance Chef to act according to his vision or else he would be kicked out. A group of cryptocurrency industry leaders in the yieldfarming.insure Telegram group are currently supporting Azeem Ahmed. I don’t know what Azeem Ahmed has seduced these industry leaders;

2. Before the fund pool was opened, Azeem Ahmed purchased a large number of yNFT tokens to ensure that he owned a large share of fund pools 1 to 2; three or four hours after the deployment of liquidity pools 1 to 3, Azeem Ahmed requested to deploy pool 4 immediately. Although Insurance Chef thought this was unfair to users, he had no choice but to create pool 4 with the BPT address. Later, Azeem Ahmed found that the impermanent loss (IL) problem in pool 4 was too serious, and withdrew all liquidity funds within a few minutes, falsely accusing Insurance Chef of mixing up the two liquidity pools;

3. The project was completely manipulated by Azeem Ahmed within a week of its launch, which ultimately allowed Azeem Ahmed to make millions of dollars, and Azeem Ahmed even slandered and defamed him along the way in order to completely take over the yieldfarming.insure protocol.

Azeem Ahmed was equally unwilling to be outdone. He also continued to expose information to the public and published a large amount of evidence on Medium, pointing the finger directly at Insurance Chef, believing that it was his lack of experience that ruined the extremely promising project yieldfarming.insure (however, this article with public evidence has now been deleted by Azeem Ahmed).

On September 19, Insurance Chef and the core developers and advisory team announced the migration of SAFE tokens to the new COVER protocol. The newly released governance token COVER will make it possible to buy and sell insurance policies and provide "insurance is mining" liquidity mining incentives. Insurance Chef admitted that as the creator of SAFE, he made mistakes in handling the issuance of SAFE tokens. In order to avoid repeating the same mistakes, the developers also created a new term "shield farming" to improve better yield farming measures and added two new core developers. It is worth mentioning that the project's advisory list includes some heavyweights in the DeFi industry, such as Andre Cronje, Blue Kirby, Sam Bankman-Fried, founder of FTX exchange and Serum, and Ivan Martinez, a well-known cryptocurrency developer.

Azeem Ahmed was obviously very angry about the fork of yieldfarming.insure. He said on Twitter that Insurance Chef’s announcement of the fork had “killed” the yieldfarming.insure project, which was only born a week ago:

"This stupid idiot (Insurance Chef) killed the whole project with just one tweet and made people lose millions of dollars. Don't forget, this project just launched, there is no product yet, and this is all we have encountered so far."

Summarize

Ryan Selkis, founder of crypto market analysis research firm Messari, compared today’s DeFi market to the 2017 initial coin offering (ICO) bubble, concluding:

“ICOs were all the rage for a while because everyone (ridiculously) thought there would be a coordinated utility token for every industry. DeFi is now one giant pool of capital that’s being stirred by a small group of insiders and mercenaries who will quickly drain your money and run.”

In fact, any unregulated market will attract some "bad actors", and DeFi is no exception. As an emerging industry that has not been around for a long time, bad actors in the DeFi market try to game with protocols/projects through some so-called "legal means" and profit from them. Perhaps only time can tell us which projects can truly provide value and which projects are covered with false cloaks. In this process, "good actors" will inevitably conflict with "bad actors".

After all, where there are people, there is the world of martial arts, and where there is the world of martial arts, there are grudges, and it is difficult to retreat from the world of martial arts.

This article is translated from https://news.bitcoin.com/defi-boom-bubble-fears-grow-as-toxic-community-disagrees-on-way-forward/. If reproduced, please indicate the source.