When Satoshi wrote that “participants can be anonymous,” he also built in the assumption that the rules are enforced by software, not by people. Most of today’s decentralized exchanges keep that promise: once a trade hits the mempool, no custodian can halt or reverse it. Yet, the certainty that a smart contract will execute does not translate into certainty that the overall game is fair. The $ 110 million Mango Markets exploit in October 2022 was executed exactly as the contract allowed; nevertheless, a U.S. jury still found it to be fraudulent this April, underscoring the gap between legal code and moral code.

That gap is widening. In the first quarter of 2022, 97 percent of all stolen crypto came from DeFi protocols, a leap from 30 percent just two years earlier. Even after a 54 percent drop in headline losses last year, users still saw almost $2 billion disappear to hacks, scams, and exploits. We have eliminated trusted intermediaries, but not the need for trust itself.

Anonymity’s hidden tax

Because wallets are free, the reputation in DeFi is cheap. The Sybil problem is no longer academic; entire Telegram channels teach “airdrop farmers” how to spin up hundreds of addresses and recycle the lucky winners. A trader who wipes out today can be back tomorrow under a fresh ENS name, ready to court copy-trading deposits.

Survivorship bias then does the rest. Traditional asset-management studies Go to Source to See Full Article
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