The dark side of DeFi and dapps in general šŸ˜±Please, prove me wrong!

Defi 101 Course
#1

Hi guys,

Iā€™m new to DeFI, so I might be missing a lot.

In fact, I REALLY HOPE I am.

A friend recently told me about an ā€œamazing opportunityā€ that can make one a millionaire in no time.

I researched into it, and what I found, is a decentralised, unstoppable ponzi scheme in its best.

I mean this:
https://forsage.io/

So, through what turned out to be one of the most popular ponzi projects on Ethereum, I realised that complete decentralization is far from perfect.

How come this worthless shit dapp, takes up 13% of the Ethereum network resources, causing congestion and high fees by doing nothing but channeling money between abusers and naive newbies?

And then this made me realise in horror, that:

ANY smart idiot that knows coding can deploy ANYTHING, and the nodes will execute it blindly - as long as it does not violate ā€œcode lawā€. For better and for worse.

However, we are human beings, governed by much more than just ā€œcodeā€ - we have ethics, values, conscience, community, etc.
On the dark side, we have greed, the desire to do something naughty, illegal, criminal.

I mean, it could be anything!

A dapp dealing with drugs, illegal weapon, child porn - whatever.

Is this really so, that any dapp that is deployed by anyone, could potentially become an unstoppable good or evil plaguing the network, and no one could do anything about it?

Or am I - hopefully - missing something?

Thanks!

#2

While technically true, all nefarious activity would be on chain, meaning it is possibly easier to incriminate individuals. The paper trail is much more obvious. Sure, there are privacy avenues to use, but using blockchain only leaves more breadcrumbs.

For this reason, current platforms of crime are much better for these people.

1 Like
#3

Get your point.

Still, as far as I know, although one might leave breadcrumbs, itā€™s close to impossible to link those to a certain individual.

In case of Ponzi schemes like forsage, as far as I understand, itā€™s impossible to prevent it from spreading, and it might as well use (rather abuse) the ethereum network by as much as 20-30% or more, and no one can check that activity, while everyone has to pay higher fees because of some illegal, or at least dubious shit dapp.

For me, a dapp like this seems to be a red flag, indicating that some sort of control/filter tools should exist, otherwise the network could be doomed to be abused and overused by shady endeavours.

Would be a rather sad destiny for a beautiful idea :confused:

@amadeobrands, can we have your insights into this please?

Thank you!

#4

Not really sure thereā€™s too much to be alarmed aboutā€¦ everything that can be done, and is done with ā€˜dirty dappsā€™ or with crypto in general has been done and continues to be done with fiat.

The benefit of crypto is thereā€™s often a highly visible unalterable record.

#5

Yeah, true.

However, the word ā€œunstoppableā€ gets a whole new degree of power - while currently things might be hard to stop, when a mindless universal computer keep executing code no matter what, it truely becomes unstoppable.
Thus, creating a more powerful incentive and a temptation even, to get away with shady things.

That is a whole new level of difficulty non existentā€¦ until now.

#6

Let me try to put your mind at ease by giving you my perspective on Ethereum. My understanding is that Eth, and other blockchains too, are a decentralized network of nodes, operated by humans. They together form a virtual machine. Kind of like how many voters can elect a government, but more direct and more open.

So from my point of view, the EVM is not a mindless computer, because it is controlled by validator nodes, which in turn are controlled by people. Then Eth has the big advantage of having a large number of passionate developers.
So should a smart contract become too big of a problem for the network, the devs can propose an EIP to hard-fork away from the chain where the smart contract is active. Since a scam dapp that takes up a significant amount of networkā€™s capacity, thus, making the network less attractive, it would be a no-brainer for the nodes to agree on implementing the EIP.

I hope that makes sense to everyone. :sweat_smile:

3 Likes
#7

Check: https://ethgasstation.info/

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image1292Ɨ765 41.1 KB

It is a clear scam and there is an active ETH comunity pointing these as scams.
There are also plugins you can install that warn you when there is an scam ETH adress on a page etc.

ATM there is also an EIP (Ethereum Improvement proposal) To raise gas fees for flagged scams ā€¦
If this happens it means that there will be less scams and if so they will have to pay higer fees but lets see how that plays out?

2 Likes
#8

My understanding is that Eth, and other blockchains too, are a decentralized network of nodes, operated by humans. They together form a virtual machine. Kind of like how many voters can elect a government, but more direct and more open.

Nice point.

Although seems like huge networks are not that agile when it comes to implementing a change.
At current rate, scammers have plenty of time (months at least) to abuse the network, ā€œmake a killingā€ on behalf of dupes and move on to create a new abuser, maybe on the new fork after the EIP. :slight_smile:

I think their should be an easier to implement, easier mechanism for dumping worthless projects.

I did not know about EIP though, thatā€™s interesting.

Thanks for sharing your thoughts mate!

#9

Thanks for the input dear instructor! :slight_smile:

Sounds good. Interesting how it will be implemented - definitely curious to see how it all plays out.

One thing is clear - it should not pay off for the abusers, to abuse either the network or dupes.

Very important for the crypto ecosystem to be better, and sustainable in the longterm.

OK, back to DeFi 101 :wink:

#10

Thanks for hilighting this Bro. I agree we should strive to keep the ecosystem as clean as possible & most in general would agree that we do. I think as we evolve as humans, computer networks will evolve in parallel to reflect the greater good. As a comparison look at the global turn out for the killing of George Floyd. In this age that behaviour is not at all acceptable & the whole world knows it. Can you imagine that reaction 30 years ago ? Evolution is a chaotic process, stars explode, planets collide, people die & shit happens but overall, surely we are evolving for the better.

1 Like
#11

Haha youā€™re welcome, very true - life is a chaotic process of evolution :slight_smile:

I just think that in a world governed by humans & quantum physics, one canā€™t put code as an absolute and ultimate decision maker. Itā€™s too deterministic, and the matter of reality is much more liquid.

Human involvement is a must to bring back some soul (not too much of it) into the system, cause sometimes itā€™s simply indispensable.

Especially when bugs, hacks and errors are inevitable.

#12

Yes , entirely agree. Thatā€™s why vinyl records always sound fuller & contain more depth than digital files.- infinite gradation & nuance as opposed to zero or one. As you say we humans are also analogue based & capable of infinite sublety & nuance. Code & protocols can take care of the mechanics of tasks but will never arrive at the complexity of human emotion

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#13

Exactly!

I used to make electronic music so I completely agree :slight_smile:

The heavy lifting and the dull stuff should be on the robots and the programmed infrastructure, but all the rest should be on us.

Glad we have consensus here :smile:

#14

Maybe if you like more government control over individuals decentralized finance is not a good space for you.

:wink:

#15

Well, I think you missed my point :slight_smile:

1 Like
#16

Sorry for being owly.

#17

While there are going to be a lot of scams, I dont really see it as a dark side. Ponzi schemes exist outside of crypto too. Itā€™s just humans in generalā€¦ not crypto/defi specific.

#18

True.
Simply in the world of smart contracts, it all becomes literally unstoppable, congesting and damaging the whole network.