DeFi’s Big Challenge: Keeping it Decentralized While Following Rules
Decentralized finance, or DeFi, is like a new kind of bank that’s not controlled by any one person or company. It’s supposed to give us more freedom and make it easier for everyone to use. But now, as rules and laws get stricter, DeFi is facing a big problem: how to follow these rules without losing its decentralized nature.
DeFi’s Tough Spot: Following Rules
DeFi platforms use something called blockchain technology to work. This means they don’t have a central boss, and they use something called smart contracts to do things like send money. But following rules, like the ones banks have to follow, is hard because these platforms don’t have a central place where they can keep all their data. A vote in the U.S. Senate showed this problem: some people wanted to treat DeFi platforms like banks, which could make it hard for them to keep working the way they do now.
Uncertain Rules
Rules about DeFi are different in different places, which makes it hard for DeFi platforms to know what they should do. If they don’t follow the rules, they could get into big trouble, like being shut down. So, they have to try to follow the rules while still keeping their decentralized way of working.
Keeping Data Safe
DeFi platforms also have to worry about keeping our data safe. Smart contracts can have mistakes, and people can try to steal our data. Following rules can help keep our data safe, but it can also make it harder for DeFi platforms to keep their decentralized way of working.
How Following Rules Affects DeFi
Following rules can make DeFi platforms more like traditional banks, which means they have less freedom and privacy. For example, they might have to keep more data in one place, which goes against what DeFi is supposed to be about.
A Better Way: The D.A.T.A. Framework
Some people are working on a better way to follow rules without losing the good things about DeFi. The D.A.T.A. Framework is one example. It uses something called AI to help keep data safe and follow rules without having to keep all the data in one place.
What’s Next for DeFi?
DeFi is still new and changing all the time. It’s important to find a way to follow rules that keeps DeFi’s good points, like freedom and privacy. If we can do this, DeFi can really become a new kind of bank that works for everyone.
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