Ethereum
$608.86 6.54%
ETH · 5w

Empty Set Dollar (ESD)

Decentralisation

A core tenet of Decentralised Finance is decentralisation (shocker). It’s a core theme that ensures equal access to the financial tools built on the platform regardless of your age, gender, political affiliation or religion. This is something significantly lacking in the traditional finance space where individuals are routinely discriminated against by governments and financial institutions for a litany of reasons. In DeFi, protocols are being designed in a way that limits the power of external actors, whether they be governments, groups within society or disgruntled individuals.

However some of the most popular stablecoins, such as USDC/TUSD/USDT, have at least some elements of centralisation built into them. While they serve a purpose as a bridge to the DeFi ecosystem, these can not be relied on as stable, censorship resistant fiat analogs. This is due to the simple fact that tokens are operated by companies in varying jurisdictions, subject to various laws, making them targets for governments and law enforcement to exert their influence over. For example, the consortium behind USDC (Centre) has blacklisted a number of addresses holding their stablecoin from transferring USDC, effectively freezing their assets. Similarly, the operators of USDT have used their admin keys to arbitrarily move tokens to other addresses when it suits them. To date, interference with stablecoin transactions and holdings by regulators has been modest, however, in the current state of DeFi, it is the most obvious vector for governments to exert unwanted influence over DeFi applications.

Other stablecoin projects have addressed this issue by developing and releasing their protocols in such a way that the founders have no arbitrary control over the protocol once it has launched, and require large communal coordination to consent to change the protocol after the fact. DAI*, AMPL, BASED and ESD achieve this by using token based governance to ensure decentr...

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