Avalanche DeFi: Can they scale and navigate complex undefined moral and ethical boundaries as a centralised entity?
The Defi ecosystem is embryonic – a wild, casino-like metaverse of primitive gamblers looking for the next 100x. We are all apes. Risk takes on a different meaning in DeFi. High-risk, low-cap stocks? Online betting? No: much greater risk. Going to Vegas with spending money? More like it. Are you transacting across bridges, changing base tokens into random DeFi ponzi coins, and scanning telegram groups for the next gem? We are all at it.
The article about gondola.finance was not a hit piece on any individual. Au contraire, the exposé intended to highlight bad practice within the space. Advisory roles, developer teams, and investors all need a safe framework to work within. Because DeFi is such a new concept, semantic boundaries are essential. What exactly is DeFi? How do we define it? Is it even in the Oxford English or Merriam Web? This goes beyond the scope of this piece, but as a starter for ten, let me ask you what you think DeFi should mean, compared to what a retail investor playing in another blockchain ecosystem thinks. Similar? Now, compare these thoughts to what developers and business leaders in the C-suite of established blockchain companies want DeFi to mean. How do the differences compare? Do we all answer to the same ethical, legal, and moral codes?
My article, and outcries from the community resulted in the loss of an advisory role at Ava Labs this week. This was not my intention, but perhaps an inevitable outcome as we all navigate this brave new world. I have no doubt one bad-apple developer pulling a soft rug should not ruin an advisor’s reputation. But absence from a project, for such a length of time, and a lack of insight was a dereliction of duty. Some key questions remain, which I will highlight below. Despite encouraging noises from team gondola, we still do not have the full picture. I believe this arose through naivety due to poor situational recognition and initial management of an embarrassing mistake (lack of recognition of the soft rug by a malign developer, despite multiple warnings).
Factors
(1) There was a failure to recognise deterioration (the selling, community concerns). (2) There was an early attempt, but, failure to rescue validated concerns early on which lead to the publication of my article. Actions, or inactions have consequences.
In fact, the team seems capable of making a positive difference with some reflection on communication and modification in tokenomics.
How can the team and advisor climb back up from this? In my humble opinion (I’m not here to ruin or smear), for faith to be restored, Gondola should publish a formal, independent audit into the selling of the tokens. Those close to the project must declare whether they provided liquidity to the protocol and whether they sold rewarded GDL tokens whilst it was promoted. It’s really that simple.
High-profile supporters of DeFi with advisory roles need to declare their holdings whilst shilling a project. To translate this into the traditional finance world, the equivalent would be stock market manipulation. Those thoughts you had about DeFi? The use cases you have solve nothing, if we allow this kind of potential practice to continue. I am not pointing a finger or making accusations. I am saying that the ability to make such inferences should not be possible. The answer is not to be anonymous; the answer is yet more openness. Otherwise, we might as well go to the slot machines. The rich and informed should not get richer from lopsided value extraction from poorer, less informed individuals.
Cottage industry level players in the DeFi space need to think very carefully as they participate. Moral and ethical frameworks should be upheld, perhaps even translated from traditional finance. The grey zone of regulatory attracting behaviour needs very careful consideration.
DeFi in any ecosystem remains a gambler’s market. In fact, questionable practice is unearthed daily across blockchain ecosystems. Far from the disintermediation of the “dishonest” or error-prone banks, the current status quo has left many rugpulled parties wondering where their money went without a framework to fall back on for reference. When an advisor and developer go absent, the entire ecosystem suffers. On the spectrum of bad practice, this example was pretty benign, and is ultimately (probably) fixable. Given the publicity of the associations with Ava Labs, it’s brought Avalanche DeFi bizdev a whole new set of problems to solve as they scale.
