Discussing the troubles currently faced by centralized crypto lenders like Celsius (CEL), Voyager Digital, and BlockFi in a recent episode of the Unchained Podcast, Leshner said that the companies are all in trouble because of the way they are operated.
“They’re opaque, they’re run based on the whims of people who are not very good managers, and they do not leverage any of the inherent new technological advantages of crypto itself to run their businesses,” Leshner argued.
He added that the crypto lenders work in much the same way as banks used to operate prior to the Financial Crisis of 2008 that gave birth to Bitcoin (BTC) and the entire crypto ecosystem.
“They are running their businesses in the same exact way as Wall Street was running itself in 2007,” the Compound founder said.
Per Leshner, “it’s incredibly sad to see people repeat the exact same mistakes when the tools to avoid them are right there in front of their faces.” He added that he hopes the industry can learn from the experience, and realize “why we have DeFi protocols and not a business with a spreadsheet.”
Leshner said that,
“This is why we like DeFi protocols – they are transparent, autonomous, and are not based on the whims of an incompetent manager. They just run themselves based on some open source code, and you can see exactly how it works and it does what it says it’s gonna do.”
As for the crypto lenders’ business practices, he said that all of “that nonsense” could have been avoided with DeFi.
Leshner once again reiterated his point during a discussion on FTX CEO Sam Bankman-Fried and the credit line FTX’s parent company Alemeda Research offered to Voyager on the condition that the crypto lender continues to honor customer withdrawals.
Pointing out the difference between ‘pure DeFi’ protocols like MakerDAO (MKR) and Compound, and centralized crypto lenders, Leshner said DeFi protocols have “no ability to halt withdrawals.”
This is “code doing what it’s supposed to do,” as opposed to rules changing “when someone feels like it,” he said.