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DeFi’s Dark Corners Evoke 2008 Crisis

DeFi’s shadowy areas and scant regulation could be a breeding ground for financial instability.

DeFi’s shadowy areas and scant regulation could be a breeding ground for financial instability.

Photographer: Soichiro Koriyama/Bloomberg
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Welcome to Bloomberg Crypto, our twice-weekly look at Bitcoin, blockchain and more. If someone forwarded this to you, sign up here. In today’s edition, Olga Kharif peers into the shadows of DeFi and sees parallels to 2008:

DeFi is being lumped in with CDS and MBS — two financial acronyms that became synonymous with financial risks and perils during the 2008 crisis — in an academic paper making the rounds. Proponents of this controversial corner of crypto may want to give the paper a read before they pounce at the next offer of outsize returns that seem too good to be true.