It's do or die for DeFi: How crypto's latest craze can save itself

Look past the giddy numbers of 2020's DeFi explosion and the practical purpose of DeFi today fades away.

How many people are benefiting from the meteoric rise in TVL, and how is that value positively impacting the broader crypto ecosystem? That's when DeFi's nefarious nature comes into focus-a heart of darkness that could lead to destruction, either by its own hand or by regulators that crush it straight to the Dark Web.

More recently, SushiSwap co-founder Chef Nomi withdrew about $13 million of Ethereum from the SushiSwap developer allocation just days after launching the DeFi protocol.

The longer DeFi goes without self-regulation, the more powerful a case its players make for government regulators to step in and make DeFi into a relatively safer space.

DeFi will look a lot less attractive to traders whose wallets come under increasingly sophisticated scrutiny, followed by a tax bite into their income.

DeFi participants should-and will- become increasingly uncomfortable with the anonymity of their trading counterparts.

Today's DeFi traders are a mostly enthusiastic community, but many protocol founders are clearly not acting in their customers' best interests.

Expect traders who are savvy enough to engage in yield farming's complex strategies to get smart about something else: the current absence of safeguards in the larger DeFi marketplace.

These drawbacks are why legions of serious, ethically-oriented retail and institutional traders are on the sidelines, vowing to keep away from the DeFi numbers game - and maybe crypto altogether.

DeFi must embrace regulation, unmask its leadership, protect its users, and realize how its direction impacts the crypto ecosystem.