Andre Cronje, founder of the Flying Tulip DeFi platform and creator of the Fantom network, said that most modern decentralized finance protocols have lost their true essence. During the recent Chain Reaction broadcast on the X Spaces platform, he noted that the real DeFi sector has been preserved only in very small niches, since classic projects must be completely decentralized, immutable and work without any intermediaries. In his opinion, almost no major protocol meets these strict criteria today. Cronje has been raising this issue for several months, previously pointing out that the introduction of circuit breakers and other emergency control mechanisms to protect against hacking automatically deprives projects of the status of true DeFi. Against the background of these discussions, the total amount of blocked funds in the sector has more than halved over the past ten months, falling from one hundred and sixty-seven billion dollars to seventy-five billion.

The opinion of a well-known developer is shared by traditional financial regulators. In its March working paper, the European Central Bank also questioned the level of decentralization of large autonomous organizations. Having studied such well-known protocols as Aave, MakerDAO, Ampleforth and Uniswap, ECB analysts have established that the hundred largest holders of management tokens control more than eighty percent of the total supply in each network. The conclusions are based on asset allocation snapshots for November 2022 and May 2023. The authors of the study emphasized that these data cast serious doubt on the expediency of exempting such organizations from the European regulation on the markets of crypto assets as fully decentralized services. Cronje himself believes that the industry has long moved away from its original ideals and turned into a new paradigm, which is more correctly called onchain finance or open finance. He explained that now the role of intermediaries is performed by specific companies that make key decisions, oversee projects and serve on risk management committees, which is a typical element of the traditional banking sector.

Despite the harsh criticism, Cronje admits that there is still room for real DeFi, and he continues to notice real innovations in individual protocols. The founder himself remains one of the most respected figures in the industry, and his new Sonic blockchain claims to be the fastest network based on the Ethereum virtual machine, achieving block finalisation in seven hundred and twenty milliseconds in a test environment. Previously, he had already become famous for creating such well-known projects as Yearn finance and the Keep3r network.

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The material has been prepared solely for informational purposes and does not constitute financial advice or recommendation.