DeFi’s Lose-Lose Problem on Freezing Stolen Funds
Tech DeFis Lose-Lose Problem on Freezing Stolen Funds Bitcoin Ethereum News Decentralized finance (DeFi) protocols are stepping in to freeze stolen funds while centralized issuers face criticism for holding back. A saw attacker-linked assets frozen after a major exploit, while some stablecoin issuers, including Circle, for slower or more limited responses in similar situations. Connor Howe, CEO and co-founder of cross-chain infrastructure project Enso, said that crypto protocols are not that different from centralized platforms or banks if a small group of people can freeze funds. “The differentiation from a bank compliance officer is less than DeFi idealists will ever admit,” Howe told Cointelegraph. The debate isnt the usual kerfuffle between decentralization and centralization, but about who gets to intervene and how quickly they can act. In practice, it can determine whether stolen funds are stopped or slip through. The limits of decentralization in DeFi To put it simply, the industry is split on whether protocols that call themselves decentralized should be able to freeze funds during exploits. Protocols like THORChain said they cannot freeze funds by design, even during exploits. Security researchers have questioned that claim, pointing to past cases where intervention did happen. Bernardo Bilotta, CEO of stablecoin infrastructure platform Stables, said the function is necessary but must operate