Genesis CEO Michael Moro said the decentralized finance (defi) sector was still too risky for institutions to get involved. Moro said some important failures had been made by high-ranking defi protocols and jeopardizing his customers’ finances. Therefore, this sector is still dominated by small investors, who have more lax risk management principles.
Defi protocols faults do not attract institutions
Michael Moro, CEO of Genesis, one of the largest cryptocurrency companies in the sector, said why defi were failing to entice institutions to invest in the protocols. In his view, space is still too risky, as evidenced by some recent mistakes and failures made by high-ranking entities. In an interview with Insider Moro, said:
“The failures and errors we have all noticed will certainly make the institution afraid to do anything big on any particular platform.”
Hedge funds and trading companies would certainly be very interested in using some of these protocols to their advantage, but these institutions are not willing to suffer from big mistakes that could cost them millions of dollars.
Another day, another hack or exploit, another failure
The DeFi sector is undoubtedly one of the most expolited and hacked in the cryptocurrency industry. This is because it is based on smart contracts that may have vulnerabilities that audit firms may not always detect. Last week alone, Compound, one of Ethereum’s leading lending protocols, made a mistake in a smart contract that left millions of dollars available to platform users.
The error was caused by an upgrade to one of the key contracts on the platform, which rewards users in the form of a native token, COMP. This update was led by community members who wrote changes to the agreement and also checked its code. According to Moro, this is one of the great dangers of the industry. He concluded:
“There is an element of trial and error in the defiance, where the mistake will cost a hundred million. You still trust someone who checked the code. I don’t think we have a robust enough ecosystem of auditors. “
One audit cannot ensure that it is reliable, it is necessary to have the smart contract audited at least two to three times. Therefore, proceed with caution and perform a preliminary analysis before making any decision.