Post by @forger • Hey
How "decentralized" are #DeFi protocols, really?
Only 3.5%* of DeFi protocols are immutable and cannot be upgraded. And sure, @LiquityProtocol is one of
Comments
- Definitely liquity does well on the decentralization aspect
- Many protocols have dependencies, so the base-layer protocols need to go immutable first. I think the ultimate goal for any protocol is:
1. immutable codebase with governance set parameters
2. protocol will always be able to function regardless of what params are set
3. parameter management is used to make the protocol run more efficiently/smoothly/increase the value prop to users
Then you need a DAO comprised of voters from all over the world (for now, token holders), and contributors (entities or individuals) paid by the DAO to meet certain goals (bizdev, treasury management, operations for incentives, marketing, developing, risk analysis, etc, etc). DAO votes only needed to change params (or protocol could even allow certain params to be owned by a diff address than the DAO) & to send on-chain funds to the various entities/contributors.
If a single entity rugs the protocol or has to cease operations b/c of their local regulations, DAO & protocol would lose $ but would overall still be functional and able to continue. Separately, contributors need better guidelines on how to best contribute - not an easy task as the right answer depends on both where they are and what they are doing, and most combinations of that don't have a "right answer" right now.
- Good to know.
- Couldn't agree more.