Curve Defi Centralization and Hive Decentralization.

I read a Twitter Tweet by

@theycallmedan and it inspired this post...

And reminded me of a post by

@tarazkp and another by

@edicted

What did these three separate tweets and posts have to do with each other?

They all spopke of decentralization as security, and in each one we learned something about Hive.

The Tweet by

@theycallmedan spoke of the large amount of Curve reserved for the founder of Curve, now worth over 250 million dollars. This Curve, which the Curve Founder has borrowed stablecoins against, and invested the borrowed stablecoins in Liquidity Pools across the Crypto Defi Ecosystem.

These are collateralized loans which are also called Collateralized Debt Obligations with automatic liquidiation prices. Which means that should the price of Curve ever fall to a certain price, it would trigger the sale of a huge amounts of Curve tokens. This large market sale would further reduce the price of Curve, and this would trigger more automatic liquidations from other people who used their Curve as collateral in collateralized loans. This is called a death spiral, and it is not a theoretic thing, it is a real thing. It is what killed Terra Luna and FTX International in our most recent past, as well as Celsius, 3Arrows Capitol and Gemini Earn, to name a few.

Centralization is a security risk

The Tweet by

@theycallmedan called this out for what it is, a security risk, caused by centralization. And centralization to such a huge degreee that this one man becomes a single point of failure for the entire Curve Ecosystem. Those are strong words, not mine, but I must agree. The "proof is in the pudding" we Americans say, and we need look no further for proof then to the Curve hack. The drop in the price of Curve tokens, which threatened to trigger a liquidation of the Curve Founders loans, and which then led to a sale by the Curve Founder of 20 million dollars in additional Curve tokens. Many are noting who bought the Lions share, the infamous Justin Sun, Founder of Tron and other blockchain projects. If you doubt the validity of my point, ask yourself why the Founder sold those tokens, right now. I think you can now connect the dots.

Blockchain transparency

Those who examine blockchain explorers and publish the results provide us the cold hard facts, because blockchain ledgers, Curve included, are transparent. Especially when you possess millions of tokens, every one watching the blockchain explorer knows when you move it, in real time or retrospectively. There are no secrets on the blockchain. This is one reason many oppose CBDCs. But that is a different story.

Hive is more decentralized then Curve?

Most on Hive would assume this to be the case. While the posts alluded to above by

@tarazkp and

@edicted speak to the relative centralization or concentration of tokens in the hands of a few, which characterized the original state of Hive, which was then Steem. The nature of token economics here is to distribute tokens widely, so that as original token holders with large amounts of tokens sold their tokens, and they were bought and then powered up by other people who came after them, the tokens became more widely distributed. This distribution of tokens results in decentralization of Hive or wide distribution.

Remember that even large stakeholders who vote and earn large amounts for these votes also give half to the people they are voting for, so there is some distribution away from large stake holders to those they vote for, which is built ino Steem and Hive tokenomics. Although when large stake holders vote for other large stakeholders, this decentralized distribution effect would be less.

In general Steem and now Hive is a model of a movement from centralization with tokens in the hands of the few founders and early joiners, towards decentralization, with more and more tokens in the wallets of more and more people. Thats the working theory anyway. Additionally, Hive has rid itself of the founders stake, and now only a few of the original large stakeholders remain as centralized points of distribution and earnings of very significant amounts of the reward pool. Some residual centralization remains with extremely large stake holders whose delegations help fuel a few large communities and a few large projects.

So for this reason I think Hive is less centralized then Steem, with no Founders Stake, and Hive continues to improve in distribution and decentralization over time. While a model like Curves with a large Founders Stake, tends to preserve the centralized nature of the project.

What do you think?