Decentralization No Longer Fits Modern DeFi Protocols

Decentralization was initially the driving force behind DeFi, but it's no longer the complete operating model for most protocols. Andre Cronje, founder and CEO of Flying Tulip, argues that our language should evolve with the industry to reflect this change.

Cronje is a proponent of decentralization and has spent years building towards its ideal. His original protocol, Yearn Finance, launched without a team allocation, foundation, or pre-mine, giving all funds directly to users. However, he notes that maintaining such a model today would be challenging due to user expectations for identifiable teams, support channels, and offchain infrastructure.

Modern protocols require a more complex setup, including reliable front ends, support channels, keepers, and liquidation bots. These functions come with real operating costs, which cannot be contained within smart contracts alone. As a result, many protocols resemble operating companies, charging fees, employing teams, and maintaining systems over time.

Cronje also addresses the issue of immutability in contracts, recommending upgradeability for complex financial systems provided governance and security models are designed around it. He emphasizes that this choice carries serious responsibility and creates a significant threat surface. To mitigate risks, Flying Tulip uses multiple layers of circuit breakers to delay withdrawals, giving users time to act.