It was not that long ago when CZ coined the term CeDeFi and no one seemed to have a problem with it. He even went a step further and started convincing people that this new thing is actually a compliment, not a competitor to DeFi. Two years after that statement we can finally see the results of CeDeFi and how it "helped" DeFi rise above everything else.

Humble Beginnings

I don't remember how it happened but I somehow tuned into a live stream where CZ Binance discussed this new thing he wanted to call CeDeFi for the first time. At that moment no one really understood what it actually is but as months passed by we started seeing all these centralized businesses like BlockFi and Celsius rise to power by using influencers to bring in more people. In case you missed it here is a video of Antoniano Pumpliano telling you that the rocketship is leaving, all of his rich friends are on it and if you miss the flight you will stay poor for the rest of your life.

It really sounded so good that only an idiot would miss out so I chose to be the idiot and see where the rocketship lands first. Surprisingly it only took a year or two for most of these centralized vaporware businesses to completely collapse and this is the aftermath:

Crypto lender Voyager Digital files for bankruptcy

Crypto exchange FTX bails out lending platform BlockFi

Embattled crypto lender Celsius files for bankruptcy protection

It only took about 2 years for people like Alex Mashinsky, Co-founder, chairman, and CEO of Celsius Network, to completely destroy the products they have built. Crypto news outlets like Cointelegraph never found the time to ask where is the money coming from to pay for the yield these centralized entities offered but they did take the time to portray Mashinsky as number 63 on their "top 100 influential people in crypto" list.

Total Mayhem

It seems to me that the disaster could be manageable if these complete idiots had a better business strategy. Most of them said that the yield comes from loans that they only give out to trusted parties while in reality, they were loaning the money to degenerate gamblers like 3 Arrows Capital, a VC firm that took out a loan to buy a yacht while being completely insolvent.

Meanwhile, people that were gullible enough to put their money into Celsius, BlockFi, and all other centralized apps that advertised themselves as financial protocols can now only watch their balance on screens while being completely unable to move or withdraw THEIR funds.

Instead of an apology, Celsius did the following - Celsius lawyers claim users gave up legal rights to their crypto. These people will do anything to get their asses out of trouble these days. Full coverage of this insane story can be found in the video below.

The Rise and Rise of DeFi

It is now more than obvious that these assholes never had the intention to manage your funds fairly or to provide a great service, they just wanted to replace the banks and do the same thing the banks are doing for hundreds of years. They want your money in and preferably they want you to never take it out. This way they can do whatever they want with it while providing you with an option to withdraw at any time, and it would all work if their customers didn't perform a bank run on them.

It's almost ironic that 13 years ago the creator of Bitcoin put a news article title in the first ever BTC block - "Chancellor on Brink of Second Bailout for Banks".

13 years later we have FTX owner Sam BANKMAN Fried bailing out all of these digital banks with the money he took from crypto investors that trade on his centralized exchange. A total shitshow I must say but this is very good news for DeFi.

While centralized digital banks slowly crash and burn in the aftermath of this bear market DeFi protocols don't seem to really care. As a business model, AAVE is no different from Celsius or BlockFi but the fact that it is a decentralized protocol changes everything.

It lends money to whoever has enough collateral to cover the loan and if your liquidation threshold is met due to market conditions while you failed to pay back the loan, the protocol will liquidate you with no questions asked. It will not call you on the phone to give you a second chance, it will not offer you an uncollateralized loan to try and make it all back, it will do what it was designed to do and that's why we all love decentralization.

The fact that DeFi works and CeDeFi doesn't shouldn't be overlooked and it should preferably be all over the news but even crypto news outlets won't mention this because they are paid by these newly minted bankers.

In The Long Run DeFi Always Wins

There is no marketing team in the world that can make a product good if the underlying idea behind the product is dumb. We briefly discussed this on the Cryptomaniacs podcast recently. Protocols like Luna can only be viable business ideas in a raging bull market but as soon as things start going south it will have to break just like Celsius, Voyager and all others did...

Meanwhile, DeFi protocols like AAVE will do just fine because there is no human factor to fuck things up. Protocols do what they are built to do and ask no questions, this is the only business model that works when you are dealing with finance.

DeFi has no favorite customers, it recognizes no one by their status it only recognizes a wallet address and how much money you have to put down as collateral. You could be the president of the whole world and still be unable to take out a loan on AAVE if you didn't provide enough collateral.

I know it may sound wrong but I am actually cheering for the worst bear market crypto has ever seen because this is the only way we can get the rats out of their ratholes. We only saw one dramatic wick down and we already have 4-5 "crypto companies" filing for bankruptcy. What happens if BTC goes to $10K? What happens if it goes back to $3K? Who has the authority, clairvoyance, and knowledge to say that this will not happen?

While our self-proclaimed crypto experts and evangelists keep fighting the red candles DeFi will keep innovating because it doesn't care nor does it rely on market prices. Over time we will keep getting more transparency, more reliability, and more trust because a great product can't be ignored forever and DeFi protocols are exactly that, great freaking products.