Will the government succeed at controlling decentralized markets?

The promise of crypto was always breaking away from centralized finance, the government succeeding at controlling the decentralized market would mean that it's just CeFi wrapped up in code running on multiple computers.

That cannot happen, I actually do believe that it is unlikely that the government succeeds at controlling the decentralized market.

The decentralized market, or as more commonly called, decentralized finance (DeFi), today has $134.187b in total value locked (TVL).

This is a metric a lot of people fixate on. Regular investors, media platforms, new projects, VCs maybe, and the list goes on. It has come to be some sort of indication of the growth of the decentralized markets, yet it's the last thing anyone should care about when assessing the state of DeFi.

Measuring growth by assets locked in smart contracts is not the way to assess the strength of the markets.

It's far more important to look at active addresses, transaction counts, fees paid (for relevant networks) and assets distribution across addresses.

These numbers will be better for judging interest, strength and weaknesses across the decentralized markets.

How many Bitcoins or Ether locked in a smart contract doesn't tell us where DeFi stands, it just tells us that select projects have succeeded in attracting capital they can stake for yield.

But when we look at how many people use these digital assets and their networks or protocols , we can determine the industry's strengths and potential weaknesses.

Earlier I said that I believed the government will not succeed and my reason is quite simple.

As the United States government paved way for capital to come on-chain through tokenization of real world assets and stablecoins, the world is moving onto a layer where they can come to understand true financial freedom.

When builders and users, in great numbers learn to use this tech, what happens essentially is that it becomes impossible for the government to control how they use them.

Think about how many ERC-20 tokens exist, how many of said tokens can the government control currently?

How many can it easily shutdown if it wanted it so today?

The answer is probably not a lot, meaning that DeFi is already outside it's claws. No matter how many protocols, products or services that the government tries to control, the core tech will always allow anyone to build away from centralized finance.

It's now more than ever, easy for anyone to create and run their own unique economy. If government policies are breaking families, small communities may very likely come together to create an alternative, on-chain economy where the underlying asset is accepted for trade amongst themselves.

I think that this will become very common, despite most people not recognizing that this is what is happening.

Posted Using INLEO