After the Storm: The Dilemma and Reflection of DeFi Participants

A week has passed since a certain DeFi protocol's stablecoin market encountered a security vulnerability, resulting in a loss of approximately $9.6 million in crypto assets. As one of the early users involved in mining for this protocol, 3D conducted a series of reviews after the incident. He is both a mining player and a content creator. In the interview, we heard his doubts, emotions, and some unspoken industry rules.

3D talked about a certain well-known DeFi platform's "default endorsement", the project's passive response to hackers, and the process of the community being blacklisted and humiliated while defending their rights. Compared to the financial losses, what saddened him more was the shaking of confidence in the industry. Although he was not the user with the heaviest losses, he may be the angriest one—not because of money, but because of being ignored and humiliated as a user. His experience reflects the common predicament faced by many DeFi participants—unclear rights and responsibilities, no way to defend their rights, and a constantly declining moral bottom line.

3D has been involved since the ICO boom in 2017, but truly focused on Decentralized Finance and arbitrage since the DeFi Summer in 2020. Currently, he mainly engages in mining while operating a video channel focused on DeFi arbitrage.

Regarding the scale of losses from this incident, 3D stated that the total amount of the insurance pool is approximately $38 million. As for the solution, he pointed out that users' principal directly suffered a loss of 15.5%. A developer from the project team invested about $1.5 million and also took out $800,000 from the treasury, covering just over 20% of the losses in total.

3D believes that the biggest problem for the project team in handling the aftermath is the complete lack of crisis awareness. They neither publicly addressed the hackers nor issued announcements to explain the situation, nor did they initiate any legal or accountability mechanisms. This stands in stark contrast to the practices of other mature Decentralized Finance protocols when faced with similar situations.

Regarding why he initially chose to participate in the protocol, 3D explained that he saw a long-followed account on social media posting related content, and then saw a well-known Decentralized Finance platform's official retweet, which caught his attention. Looking back now, there are indeed some problems with the operational logic of the project, and it seems more like it was boosting the usage of a certain platform's stablecoin.

3D believes that the project team has been extremely passive in pursuing stolen assets, even completely inactive. What is even more disappointing is their arrogant and indifferent attitude towards the community. Many users inquired about the situation immediately after the incident, only to be directly characterized as "the insurance pool's responsibility to bear the losses," with no space for basic discussion.

Regarding the role of a well-known DeFi platform in this incident, 3D stated that the design of this project is essentially to serve that platform, and it can be said to play the role of a "younger brother" in its ecosystem. Without the endorsement of that platform, this project would not have been able to raise so much funding. However, after the incident occurred, that platform immediately distanced itself, stating "it's just an ecosystem project, and has nothing to do with me." This attitude has left many users feeling disappointed and angry.

When it comes to the biggest difficulties in protecting the rights of current DeFi users, 3D pointed out that the core issue lies in unclear rights and responsibilities, coupled with the lack of regulation in the entire industry. In this situation, it becomes very difficult to protect rights. For most users, there are almost no effective channels for rights protection.

In the end, 3D stated that the biggest blow from this incident was not the financial loss, but the shaking of confidence in the industry. He began to seriously doubt the sustainability of this industry, as it would be difficult for the sector to continue to develop if all project parties adopted a similar attitude. Nevertheless, he still maintained confidence in the stablecoin system, but held a cautious attitude towards the development prospects of certain platforms.