Carolyn Wilkins from the Bank of England talked about the crypto’s basic technology and also about the Defi sectors and claimed that all the Defi platforms poses similar kind of risks.
The concept of Decentralized Finance (Defi) came into light in August 2018 during a telegram chat discussion among some Ethereum developers and the inflow of Defi projects in the crypto industry started to take pace in early 2019. The basic principle of Defi platforms is to provide full freedom to the crypto traders & investors in the crypto market.
On 19 October, Carolyn Wilkins, an external member of the central bank’s financial policy committee and a former leader for Canada’s central bank, said that almost all kinds of Defi crypto platforms are associated with many risks like financial scams despite Defi devs claim to be decentralized.
“Concentrations of power in (proof-of-work) and (proof-of-stake) systems, and other flaws in the governance of crypto and Defi, have already contributed to all-too-familiar issues; top of the list are business failures, illegal activity and financial losses for investors,” Bank of England official says
Further, Wilkins said that if we will ignore this thing then it will degrade the interest of investors and also may result in a very big issue for the digital financial sector.
Wilkins’s statements are much similar to the study report of
April 2022, which noted that the top 50 Defi protocols by market cap are under a full centralized state because validators in these projects are holding around 40-100% stakes.
Furthermore, Bank of England official suggested that crypto proponents & companies work against these issues so that people remain active in this innovative space with full trust.
Wilkins also said that the Proof-of-work consensus is also not secure because miners can take benefits from their position and can change the transaction execution system in the crypto network.