"Rules are required to ensure DeFi projects grow and mature"

[Yamane_Keto]

A panel at Consensus Hong Kong 2026 argued that most DeFi protocols must pass through a pragmatic, temporarily centralized “incubation phase” before they can safely decentralize.

Industry leaders said institutional adoption will require professional, rule-based infrastructure that sacrifices some early-stage decentralization so protocols can mature and withstand scrutiny from global financial markets.

Anand Gomes, head of Paradigm and Paradex, dismissed the idea of binary decentralization, instead framing the current state of most protocols as a necessary "incubation phase."

Gomes famously likened the role of a protocol founder to that of a parent. "You want your kids to be strong and independent once they grow up," he explained, "but that doesn't mean you leave them unattended in their infancy.

DeFi proponents are now openly discussing the necessity of using centralized control mechanisms during the initial months (which could extend indefinitely). If centralization is essential, then why promote DeFi in the first place?

[TastyChillySauce00]

There is something called deployment on testnet for them to test things. In mainnet everything should be verified, tested, and thoroughly audited. The binary decentralization doesn't make sense, with centralized control at the early phase now they switched from risk of exploit to counterparty risk.
What happen if the defi founders happen to be scammers? it happens a lot actually where defi founder aren't trustable.

The silly thing is centralized incubation phase they're talking about actually already happened looking at how some defi founder could press the switch and freeze the pool. Paradex even rolled back their defi not too long ago.

[gunhell16]

A panel at Consensus Hong Kong 2026 argued that most DeFi protocols must pass through a pragmatic, temporarily centralized “incubation phase” before they can safely decentralize.

Industry leaders said institutional adoption will require professional, rule-based infrastructure that sacrifices some early-stage decentralization so protocols can mature and withstand scrutiny from global financial markets.

Anand Gomes, head of Paradigm and Paradex, dismissed the idea of binary decentralization, instead framing the current state of most protocols as a necessary "incubation phase."

Gomes famously likened the role of a protocol founder to that of a parent. "You want your kids to be strong and independent once they grow up," he explained, "but that doesn't mean you leave them unattended in their infancy.

DeFi proponents are now openly discussing the necessity of using centralized control mechanisms during the initial months (which could extend indefinitely). If centralization is essential, then why promote DeFi in the first place?

Nowadays, investors are really hooked on DeFi projects, and from what I can see, Aerodrome.finance is one of their top picks. Platforms like this are a huge hit with long-term investors.

If your assets are earning at least 5% APR or more and the TVL is high, you wouldn't really doubt the project as an investor, especially with that kind of liquidity, right?
Although, of course, the risk is always there.

[el kaka22]

This is how they crash to zero. The whole point of DeFi is that its decentralized, and as long as they get even a smallest fraction of centralization, there is no need to trust them anymore and we could just use normal centralized projects instead. Like instead of using a DEX with "just ab it of centralization", I would prefer to use Binance instead because at least that is a big one that I can trust when it comes to my money.

Decentralized is being trusted only because there are no authority to control or limit but only predetermined rules and as long as they stay that way they have a chance to at least try to be big, while they are of course nowhere near as big as binance, they are at least having one advantage which is not up for discussion, they can't go centralized.

[JeffBrad12]

It's like seeing tradfi boomers trying to make crypto space more familiar by putting centralized control everywhere they see.
If they want to ship a centralized finance, they should do it in Ripple's blockchain where they should be, primarily because the blockchain is created to be centralized and cater to the need of boomers tradfi who always want control.
Why should they deploy it everywhere else.

[tbterryboy]

It's like seeing tradfi boomers trying to make crypto space more familiar by putting centralized control everywhere they see.
If they want to ship a centralized finance, they should do it in Ripple's blockchain where they should be, primarily because the blockchain is created to be centralized and cater to the need of boomers tradfi who always want control.
Why should they deploy it everywhere else.

Because, they can't consider how the world works if it is only decentralized and this is why they keep trying to make everything as centralized as it gets. What we however really need is to make sure that they are wrong and they know they are wrong and they can't make this work.

Obviously it is not going to be easy for them to realize this because it takes time for someone to see what they did was wrong, so maybe a few of them actually tries it and when they see we do not give them any credit or any funding or use their methods, they will realize nobody wants that.

[nelson4lov]

It is a sad thing to see where our industry is currently headed. This used to be an active industry with several billions being actively used across different sectors and not just Lending and Borrowing. Even EigenLayer alone used to boast of about $12B in value staked to their ecosystem. Bringing centralized country will just stop the amount of level of innovation that industry sees from time to time. And the reason why I don't like centralized authorities like this is because everything can be manipulated conveniently and easily moving forward.

[o48o]

A panel at Consensus Hong Kong 2026 argued that most DeFi protocols must pass through a pragmatic, temporarily centralized “incubation phase” before they can safely decentralize.

Industry leaders said institutional adoption will require professional, rule-based infrastructure that sacrifices some early-stage decentralization so protocols can mature and withstand scrutiny from global financial markets.

Anand Gomes, head of Paradigm and Paradex, dismissed the idea of binary decentralization, instead framing the current state of most protocols as a necessary "incubation phase."

Gomes famously likened the role of a protocol founder to that of a parent. "You want your kids to be strong and independent once they grow up," he explained, "but that doesn't mean you leave them unattended in their infancy.

DeFi proponents are now openly discussing the necessity of using centralized control mechanisms during the initial months (which could extend indefinitely). If centralization is essential, then why promote DeFi in the first place?

That's the irony here. Some devs are selling snake-oil, riding with the idea of decentralization. And people believing in the importance of decentralization are often same group who are firm believers that true decentralization should be resistant to any existing power.

But centralization is essential from the point of regulators. And if any DeFi is dependable of known devs, or they want to make semi centralized company that gets it revenue from their De-Fi service, they need to comply with regulations if they want to keep the light on. Devs need money to work, and their ability to have even bank accounts are pretty tied to how compliant they are, when it comes to AML laws.

[Yamane_Keto]

This is how they crash to zero. The whole point of DeFi is that its decentralized, and as long as they get even a smallest fraction of centralization, there is no need to trust them anymore and we could just use normal centralized projects instead. Like instead of using a DEX with "just ab it of centralization", I would prefer to use Binance instead because at least that is a big one that I can trust when it comes to my money.

Another possible reason for using DeFi is the ease of listing tokens. Instead of waiting for the listing process to be completed, they can be listed easily via DeFi.

It is a sad thing to see where our industry is currently headed. This used to be an active industry with several billions being actively used across different sectors and not just Lending and Borrowing. Even EigenLayer alone used to boast of about $12B in value staked to their ecosystem. Bringing centralized country will just stop the amount of level of innovation that industry sees from time to time.

Without a solution to the liquidity problem, DeFi projects cannot grow, and liquidity can only be increased by providing incentives, either through high fees, which is something traders do not like, or by offering high returns to those who provide liquidity to the project.

It's like seeing tradfi boomers trying to make crypto space more familiar by putting centralized control everywhere they see.
If they want to ship a centralized finance, they should do it in Ripple's blockchain where they should be, primarily because the blockchain is created to be centralized and cater to the need of boomers tradfi who always want control.
Why should they deploy it everywhere else.

They are afraid of governments and without legislation to protect them, we wouldn't be surprised if there were KYC DeF.

[asriloni]

It is a sad thing to see where our industry is currently headed. This used to be an active industry with several billions being actively used across different sectors and not just Lending and Borrowing. Even EigenLayer alone used to boast of about $12B in value staked to their ecosystem. Bringing centralized country will just stop the amount of level of innovation that industry sees from time to time. And the reason why I don't like centralized authorities like this is because everything can be manipulated conveniently and easily moving forward.

No need to feel sad with it. It's the consequence when crypto wants massive adoption and billions go to its ecosystem. Slowly, but surely, everything will change. We're in the era when permissionless platform is starting to move into the permissioned platform. However, there may be a solution to avoid this by balancing the regulation and privacy.

Finding a midle ground between regulation and privacy will help crypto in term of stability while it's not gonna abandon the importance of privacy to reduce regulatory impact. Nevertheless, not many crypto developers were trying to working on this.

[MaxLevCoin]

A lot of DeFi projects start with training wheels, the team can upgrade the contract, pause it in an emergency or fix bugs. Thats not fully decentralized, but its also how they avoid gettin wiped out by one bad exploit early on. The real issue is when the temporary part becomes permanent. If a project can change rules or freeze things forever, then its basically centralized finance with a DeFi label. So I dont mind an early control phase,  but it should be clear and limited, with a real plan to hand power over to the community over time. If theres no path to that, then its mostly marketing.

[TastyChillySauce00]

A lot of DeFi projects start with training wheels, the team can upgrade the contract, pause it in an emergency or fix bugs. Thats not fully decentralized, but its also how they avoid gettin wiped out by one bad exploit early on. The real issue is when the temporary part becomes permanent. If a project can change rules or freeze things forever, then its basically centralized finance with a DeFi label. So I dont mind an early control phase,  but it should be clear and limited, with a real plan to hand power over to the community over time. If theres no path to that, then its mostly marketing.

Unfortunately there are so many defi projects that are keeping the centralized control even long after the early phase, at this point defi is not really a decentralized finance anymore but just a centralized finance living on-chain with no decentralization whatsoever and that is the truth.

[FinneysTrueVision]

DeFi is already becoming very centralized. There are already some relatively large permissioned lending markets that have compliance requirements.

Ethena’s USDe stablecoin is basically a centralized hedge fund, where they take custody of your money and do some trading off-chain to earn yield. Minting of USDe is only possible if you are whitelisted and KYC’d. Other types of yield bearing stablecoins work in a similar way.