Image: Humanprotocol.org
Dear readers with bright ideas,
Last week, we took a small step into the world of decentralized finance and had a brief chat with you about how the system works.
DeFi platforms can generate profit for you because you contribute to them. We also added that because there is no central bank directly influencing interest rates as in traditional finance methods, you can make more profitable transactions.
Just as the absence of an authority is the core idea of the cryptocurrency world, we should now better understand the opportunities that this lack of authority can offer. After examining the advantages and points to consider, let's also take a look at how this system began.
Where did this DeFi come from?
Historically, we know that traditional monetary systems needed to be trusted by people in order to function effectively. Initially, these systems began to operate with centralized authorities establishing certain currencies, and people began to trust those currencies thanks to these centralized authorities. However, as this trust began to erode, people started questioning the way centralized authorities managed these systems. DeFi, much like Bitcoin once did, emerged to address this need arising from people's distrust. Open to everyone and not tied to a central authority, DeFi systems offer people the freedom to conduct transactions in ways of their own choosing.
Since 2017, DeFi projects have made significant progress, and this transformation in traditional monetary systems has gone far beyond simply transferring money. DeFi, which enables financial transactions through smart contracts, has also provided access to information from external sources via a bridge called the Blockchain Oracle. Because the blockchain itself cannot provide external information, this system allows access to information not on the blockchain through the bridge it establishes; in other words, it acts as a link between data on the chain and data not on the blockchain. Without this bridge, smart contracts can only work with data on the blockchain, making their contribution much more limited. With the bridge, they can be useful in a much wider range of areas. From election-related data to hospital records, they can facilitate our work by transferring data from various fields to the blockchain.
Another issue facing DeFi projects: Cyberattacks
The FBI, the United States' domestic intelligence and security agency, is warning cryptocurrency investors to take various precautions before investing money in decentralized finance platforms. The fact that approximately 97% of all cryptocurrency thefts in 2022 originated from DeFi platforms is truly concerning.
https://www.engadget.com/fbi-defi-advisory-223153151.html
Thodex Scandal fugitive captured.
As you may recall, Faruk Fatih Özer, the founder of the cryptocurrency exchange Thodex, disappeared after it was discovered that he had fled to Albania on April 20, 2021, with millions of dollars worth of cryptocurrency belonging to 400,000 people.
In one of the biggest financial scandals in Turkish history, the company owner, so to speak, pulled the plug and disappeared, and an Interpol red notice was issued against him. On August 30, Interior Minister Soylu announced that this escape had ended and that he had been apprehended in Albania. It was stated that Thodex founder Fatih Özer would appear before a judge in Albania, after which the extradition process to Türkiye would begin.
https://www.hurriyet.com.tr/ekonomi/thodex-faruk-dunya-listelerinde-ilk-10da-42130177
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See you next week! Happy Sunday! ☀️
Originally published on Medium on September 07, 2022. English translation of “Merkezsiz Bülten: DeFi Dosyası 2”.