Bitcoin was the world’s first-ever decentralized digital currency without a central authority or an overlord. “Truly Decentralized.” But since then, the industry grew and now we have a whole set of “decentralized” finance in response to the rise of centralized financial systems.
The endless centralization and decentralization tussle have once again gained prominence. This time, it was the popular AMM platform Ocean Protocol which got dragged into the mud in the recent Kucoin Hack. But It wasn’t until two days later that Ocean Protocol Foundation realized that out of the total $150 million stolen funds, over $8.6 million accounted for OCEAN tokens.
Abandoning decentralized principles to save a decentralized system
The foundation then revealed halting the OCEAN contract. It was this step than garnered significant criticism from the community. Many popular analysts questioned as to how decentralized are these DeFi projects.
TokenSoft’s Mason Borda took to Twitter to express his views regarding the whole episode and tweeted,
“If you can pause your token contract, it is a security. if you can pause your token contract, it is not decentralized. If an exchange with your projects’ tokens gets hacked, and there is nothing you can do to help token holders. It is decentralized.”
List goes on..
It’s not just Ocean Protocol that has come under the scanner. To minimize the risk and loss in this incident, the team behind several DeFi platforms made serious changes in response to the security breach on the centralized exchange. DeFi platform Orion Protocol, for instance, revealed taking an “executive decision to reissue all ORN tokens 1:1 via a token swap”.
Another decentralized notary service provider, SilentNotary decided to re-issue its SNTR tokens.
https://twitter.com/zhusu/status/1310149866366988288
Interestingly, a popular decentralized exchange, Uniswap was reportedly leveraged to swap from altcoins to Ethereum. However, as yet there has been no notification from their end. The problem that could arise out of this is if the swapping continues, is that it could set off an alarm for the regulators.
Kucoins hacker begins laundering his $150,000,000.
He started swapping his $OCEAN for ETH via Uniswap.
He already dragged the price down by around 4% in less than an hour and doesn't seem to be slowing down.
Due to low liquidity for this token, he is going to crash it hard. pic.twitter.com/gKcsgpUe3a
— Alon Gal (Under the Breach) (@UnderTheBreach) September 27, 2020
Since the community remained entangled in the continuum of centralization and decentralization, it is important to note that 100% decentralization is probably not viable in the real world. Both factors can play a very important role in decision-making. While decentralization needs a powerful champion at the center to be successful, the world has yet to see such a system in place.