My short answer; it’s totally imagined and not for just the reasons identified by Bloomberg. DeFi software does not just spring into existence, it needs to be created, fixed, and managed. The idea that this can be done democratically through voting is flawed. Deciding who gets to vote is the first undemocratic decision. However, the bigger issue is that as the number of use cases operating on top of the platform increase, so does the need for modifications to support those use cases. This might involve obvious changes, such as support for integration with other blockchains or cryptocurrencies, but there will certainly be changes required to meet the needs of specific use cases as well. Getting the resources to develop for a new use case is problematic; few users stand to benefit, and precious resources are needed to focus on developing and deploying major enhancements.
Anyone that tells you that deploying new operational software on an existing high volume blockchain is simple is lying- just look at the problems that have ensued with each new release of Bitcoin and Ethereum. In the worst case scenario the blockchain is split, as has already happened to both Bitcoin and Ethereum, with some voters and their own solutions deciding to stay on the original version while other voters and solutions migrate over to the new version. Now imagine a Decentralized Autonomous Organization (DAO) worth billions suddenly needing to decide if it will migrate its blockchain and smart contract environment it will remain operational on. These and Oracles are key components likely to be modified to address the needs of the majority – whoever they happen to be. Then there are also the additional issues raised by Bloomberg:
“There’s a tension in crypto that Stacy-Marie is fascinated by. On the one hand, there’s this prevailing belief in the necessity, indeed the superiority, of decentralization. On the other hand there’s reality: when things hit the fan, folks respond by seeking a bailout, by demanding someone – perhaps even a regulator! – hold fraudsters accountable, and by consolidating around the strongest and biggest players in the market. In an industry so prone to spectacular scams and expensive hacks, this tension is ever-present. Can you simultaneously reject all forms of centralized control and then demand help from centralized authorities in times of trouble?”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
Please also check out: Watch out DeFi, the Regulators Are Coming!