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Laura Shin, industry influencer, highlights the severity of loss-given-default in decentralized finance (DeFi) compared to traditional finance.
She points out that when something goes wrong in DeFi, losses are immediate, total, and irreversible. Shin questions why depositors are willing to accept only 3 percent returns despite these risks, referencing a debate featuring Tom Dunleavy and Adrian Czarnicki.
Shin previously reported that Morpho faced $1 million in exposure after Lazarus’ $300 million KelpDAO/Aave exploit. She also described how Arbitrum executed a freeze on DPRK-linked assets while shielding other users. Both events point to the ongoing operational and security risks in DeFi platforms.