Flash Loans have emerged as the existing approaches within TradFi have blended with the technical realities of DEFI. Decentralised Finance has grown so fast because of the composable nature of the Ethereum ecosystem, within which it exists.
Composability is the ability of different components to seamlessly integrate; DEFI is often described as financial lego. Applications that can work together because of the token standards that Ethereum provides, and the common programming language, Solidity, for building Smart Contracts, the logic for how each lego component works and interfaces with other pieces of the system.
DEFI powers lending and borrowing, yield aggregation, Stablecoin trading and decentralised exchanges. Across all those sectors are numerous applications that are interoperable, allowing value to flow, facilitated by Smart Contracts and the logic they contain.
The Masters of the DEFI Universe are therefore the developers that can code a Smart Contract and also understand the rules of Lego finance. People like Andre Cronje have become minor celebrities within the sector creating new services and applications, while there are also those who shun the limelight but have the ability to use options like Flash Loans in both legitimate and illegitimate ways. The difficulty is that the boundary between good and bad uses of Flash Loans isn’t always obvious.
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