Decentralized Finance (Defi) platforms offer the promise of democratized financial services, but come up with considerable risks. Tobias van Amstel emphasizes that both newcomers and experienced users can navigate the complexity of Defi -Loans by following a disciplined approach.
Insight into the threats: smart contracts and mismanagement
Defi -platforms, although revolutionary in their promise of democratized financial services, are not without risk. For both newcomers and seasoned participants, the landscape of Defi -Loans can feel as a treacherous sea – with hidden currents and unpredictable storms. However, as Tobias van Amstel, co-founder of the innovative Defi-platform height, explains, users can still navigate these often turbulent waters by simply following a simple and disciplined guide.
Van Amstel, an entrepreneur who successfully left two Web2 technology companies before he immersed himself in the crypto space in 2017, set up the height to tackle the frustrations he encountered firsthand in Defi -Loingen. During the so -called “Defi Summer” of 2020, Van Amstel was an active borrower, who is committed funds on various platforms such as Compound and Aave to pursue yield strategies.
His persistent challenge was the ‘assessment between capital efficiency and risk’, which often meant that it was more collateral than ideal. Height was born from this battle, designed to optimize the Lending Mechanics van Amstel once personally struggle.
According to Van Amstel, the most prominent security threats come from two main areas in Defi -Lending: in the first place there are vulnerabilities of smart contract. These digital contracts, which automate similarities on the blockchain, are powerful but can be used if they contain coding errors or logical errors.
“Bugs or exploits can lead to loss of funds,” says Van Amstel, underlines that these technical weaknesses are excellent goals for malignant actors and can lead to devastating losses for users.
In addition to technical glitches, he also points to “Protocolisagement, such as poorly designed liquidation mechanisms.” These design errors can, if wrong and wrong, lead to step -by -step liquidations and significant financial impact for users, even without an external hack.
Van Amstel’s Playbook: Three Pillars of Protection
Despite these inherent risks, Van Amstel says that users are not powerless. He outlines a series of fundamental precautions that each participant must hire:
Firstly, he insists on users to prioritize transparency and verifiable security. “Stay with controlled platforms with transparent documentation and open-source code,” advises Van Amstel. Independent security audits offer crucial validation, while Open-Source Code enables the community to investigate the platform and to promote more trust and accountability.
Secondly, a cautious approach to capital allocation is of the utmost importance. “Start Klein – Test with at least capital before scaling up,” he recommends. With this strategy, users can familiarize themselves with the intricacies of the platform and observe their performance in real -time, so that potential losses are minimized during the learning phase.
Finally, a deep understanding of the loan mechanics is crucial to avoid painful surprises. “Understand liquidation thresholds and loan conservatively to prevent them from being forced from a position in a volatile market,” emphasizes Van Amstel. By maintaining a healthy collateralization ratio, users can make a protective buffer against sudden decline, so that automated liquidations can be prevented that can lead to considerable losses.
The road to massive acceptance: Settings and Market growth
The Defi discussion extends beyond individual user safety to the broader issue of institutional acceptance. A recent JPMorgan report suggested that although Defi would bring a revolution into financial services through cost savings and new opportunities through blockchain-based smart contracts, broader institutional hug depends on tackling security, compliance with legal and investor protection.
When asked whether these are indeed the primary obstacles, Van Amstel told Bitcoin.com news that he largely agrees, in particular about the need for continuous improvement of the protection and safety of investors. However, he offers a nuanced perspective on compliance with the regulations.
“Regulatory compliance is an interesting subject,” Van Amstel notes, which suggests that the inherent characteristics of Defi may require a different regulatory approach than traditional finances (Tradfi). “Defi offers benefits that Tradfi cannot – such as transparency and immediate regulation. This might require fewer regulations.”
He illustrates this point by considering the challenge of illegal financial activities. “Take Ponzi schedules as an example. It is difficult to maintain a Ponzi schedule in a world where all assets and transactions are transparent on the blockchain.” This inherent transparency, he claims, could reduce some risks that want to tackle traditional regulations, making it possible to streamline the path to compliance with legitimate institutional players.
Although the challenges that are currently confronted, probably mean that mass acceptance is still at some distance, Van Amstel projects the sector to grow to $ 3 trillion in the next five years. “That is only 10 times of the current level and still only about 2-3% of the total assets in traditional finances,” he claims.
The growth of space, he believes, depends on security and user -friendliness. “Trust in fund protection is essential, making strong risk management a must. At the same time, his intuitive design and better education are crucial to attract regular users, to go beyond the early adopters. That is where True Scale starts,” he explained.
Maintaining neutrality: an attitude against interventions
The co-founder of De Height shared his position on market interventions on a less related subject. While he empathizes with users who lose money to hackers, Van Amstel says that he is not in favor of interventions that undermine the principles on which Defi is based.
“Interventer (even with good intentions) is a dangerous precedent. Where do we draw the limit? Do we also have to reverse with fat -filling transactions? Address meev? Who comes to decide what is eligible for intervention and what is not?” Van Amstel asks. He claims that the health of industry depends on the preservation of credible neutral infrastructure instead of saving selection funds. He regards this as a “more difficult path, but in the end a more resilient.”
In the meantime, Van Amstel reveals how height tries to make Defi -Loingen more capital more efficient. The platform wants to activate inactive collateral that traditionally statically static in overcollateral loans. The amount uses automated strategies to use this unused capital in opportunities with a low risk, yield -generating possibilities, which generates additional returns and possibly compensates the loan costs, even lead to self -repairing loans over time.
Van Amstel emphasizes that this smart automation is led by principles of security and risk management, so that height can retain the core benefits of overcollateral lending while the capital of user becomes more productive and unlocking greater value from their assets.