to be clear

The FTX blowup showcases failures of centralized crypto exchange AND DeFi and capital allocation (VC participation) in crypto.

earlier this week, the rumors were that wrapped BTC and wrapped alts such as ETH on Solana (e.g. soETH) were worthless. *wrapped BTC on crypto protocols drives that protocol's DeFi activity*

now we're past rumors...

this week's crypto mantras have been

a) DeFi fixes this
b) it's time to shift from token speculation to utility

same mantras we've heard following crypto's prior implosions, but FTX was deep into both DeFi and utility (FTX is gambling- tokens primary, sustaining use case)

personally, I don't have a problem with gambling when it's called gambling and participants know what activity they're engaged in. but when the casino is lauded as powered by altruism, that's another thing.

btw- here's SBF describing DeFi pretty honestly.

he has the capacity for honesty, he just wasn't committed to it. not sure why he thought Bloomberg was a safe place to be honest about altcoin (Solana, Ethereum) DeFi, but glad we have this on record.

stepping outside of FTX' critical significance* to Solana "DeFi", let's acknowledge that today "DeFi" generally refers to Ethereum based activity...

(*should a centralized exchange be critical to DeFi?)

ETH DeFi is inseparable from 1) the control & discretion of a small group of people + 2) the ponzinomics that drove FTX's collapse. ~75% of Ethereum blocks are censored due to "compliant" staking pools. That happened within just weeks of Ethereum's shift to PoS.

this ETH censorship demonstrates a capability (by the heads of state) to take other actions in an easily coordinated manner, incl. other forms of blacklisting or rule changing. not much different from the traditional finance system, which itself presents less technical risk.

a crypto VC GP (billion $ fund) just said that bc the ETH/SOL rules are software encoded the protocols are decentralized. nope.

it's not that the rules are in the code that make a protocol decentralized, it's that the code cannot be changed w/o consent of disparate stakeholders.

only bitcoin passes that test

bitcoin, not crypto

I don't make the rules, you don't make the rules, Satoshi doesn't make the rules, and that's the point.