Thread by @jpurd17

1/ Our system is fundamentally broken.

With the implicit recognition the government will bail out "systemically important" companies, they opt to return a disproportionate amount capital to investors to boost their share price...

2/ Rather than, I don't know, maybe buying pandemic insurance to protect your business from complete implosion

cnn.com/2020/03/19/bus…

3/ This pretend capitalist system leaves its citizens footing the bill for companies with no incentive for proper risk management

h/t @allenf32
medium.com/@allenfarringt…

4/ Thankfully we have crypto.

A parallel financial system born with an explicit rejection of this type of behavior

5/ While @MakerDAO is undoubtedly "systemically important" to DeFi, it wasn't the average users socializing the recent losses but rather the MKR holders with skin-in-the-game who take this risk in order to participate in the upside

An objectively more equitable system

6/ In instances that user funds are inherently at risk - like a lending pool being drained through a smart contract bug or oracle attack

Then there needs to be proper risk management tools for market participants to adequately protect themselves

7/ Discretionary mutuals like @NexusMutual or options products like @opyn_ will serve crucial roles enabling entrepreneurs and early adopters of DeFi to have comfort allocating capital in these risky environments

8/ In order for the vision of a truly decentralized financial system to be fulfilled there will need to be a proliferation of these types of hedging instruments to provide the backstop currently served by the government

messari.io/article/risk-m…