00:00What happened?
00:00So let's take a step back because some of these names might be unfamiliar for viewers or for me and
00:06you.
00:07So last week, I believe, or the week before, there was a giant hack of a DeFi protocol.
00:12It was the biggest crypto hack this year.
00:14It was $240 million.
00:16What was peculiar, we know that crypto hacks are very frequent.
00:18What was peculiar this time was that the hackers took what they'd stolen and put it on a DeFi protocol.
00:24DeFi protocols are essentially financial systems that run on their own.
00:28And the biggest one on lending is called Aave.
00:31So they put the stolen money there as collateral to borrow more money, which meant people that were on that
00:36ecosystem thought,
00:37uh-oh, maybe the collateral is not going to be that good collateral if it's stolen.
00:40So then people started taking away their money from the other protocol, right,
00:43which meant Aave had a drop in the money on it that was around $10 billion.
00:48And I think it was $26 billion before the hack.
00:51So that meant people had to go in and try to essentially kind of save Aave, put money back in
00:57so that people felt confident enough to use it again.
01:00Who leads a rescue effort in a decentralized world?
01:03That's part of the question, right?
01:05Like, if people are rescuing it, is it really decentralized?
01:09And on these platforms, you get high returns because of the risk, right?
01:11So if someone's going to bail you out, then it's a bit messed up, right?
01:15Should they step in?
01:16I think it was people in the industry.
01:17We saw the founder as well say, you know, we're going to help.
01:21I mean, it's not the protocol's fault that the hacker came in and used, but it's still part of the
01:27system, right?
01:27Like, in a way, people are wondering, are you kind of gaming it?
01:30If people just come in and bail you out, then is it really decentralized?
01:33What I always wonder when I see headlines like this, even if they're with services that might not be familiar
01:38to a large audience, is what it does for the way that people think about the concept of cryptocurrency.
01:44Or not even just investing in it, but the idea of, and Scarlett talks about this all the time, of,
01:49you know, DeFi sort of making its way over into traditional finance.
01:52Is it a sign that it's parts of this are not just ready for prime time?
01:57Partly, yes, but it's also interesting because I've been having chats over the past few weeks because I'm also very
02:02interested in hearing about, you know, the intersection and the convergence of traditional finance and crypto.
02:07And there's a lot of interest in DeFi from asset managers and, you know, real big players who see it
02:13as an interesting way, an efficient way to get more capital because essentially you're sourcing money and pools of money
02:20to invest, like borrow, lend, etc.
02:22So it is perhaps always, you know, a reality check to show that you are in an, you know, in
02:27an online world where hacks happen and you can't control everything.
02:31Is there any evidence that this has discouraged anyone from, you know, participating fully in DeFi?
02:37I'm not sure yet because I don't know that many have come out and said openly that they were thinking
02:40of it.
02:41But that's an interesting thing to ask for sure.
02:43And as we follow up is, were you looking at it?
02:45Are you now not looking at it anymore?
02:46How do you approach it?
02:47How do you approach it?
Comments