Litecoin’s Charlie Lee: I’m Not “Optimistic” About DeFi Success

Litecoin creator, Charlie Lee has said he is neither “excited” nor “optimistic” about Decentralized Finance (DeFi) applications, despite that sector of the crypto industry seeing massive growth this year with a valuation above $2.5 billion.

Charlie Lee shared his thoughts on DeFi in a recent interview with AltcoinBuzz, highlighting that it is almost impossible for DeFi projects to achieve true decentralization and that there is “going to be a lot of problems” for the space going forward.

The missing feature for DeFi, according to Lee, is that there is no “undo button” as with centralized finance where banks maintain insurance to protect users in the event of losses.

With DeFi, he noted that truly decentralized projects could not undo any bugs in the protocol, which could lead to substantial losses when malicious actors exploit DeFi smart contracts. Recently, Coinfomania reported multiple hacks including DeFi protocols BZx, and Fulcrum. Intruders exploited vulnerabilities to over $1 million from both projects.

Charlie Lee also argued that maintaining a back-door for the DeFi “issuer” to reverse transactions as with the traditional stock market means that projects have to sacrifice the “decentralized” narrative or risk putting a lot of money on the line.

Charlie Lee on DeFi

The Litecoin creator conclusively described decentralized as “a kind of solution that is impossible to solve,” since it is either centralized and safe or decentralized and not safe.

In a decentralized finance system with millions of smart contracts interacting with each other, the surface area of bugs is going to be so large that it is impossible to create something that is perfect. So there’s going to be a lot of money being stolen and that will never end. – Charlie Lee on DeFi

Meanwhile, although Lee does not see a future where decentralized finance will become dominant, Tron Foundation CEO, Justin Sun had said in a recent panel that Tron would focus on DeFi to replicate Ethereum‘s success.