black android smartphone on white surface

BlockFi CEO Counters the Claim That Blockfi Will Soon Be in a Shutdown Mode Like Celsius and Voyager

  • Zac Prince tweets that BlockFi has resumed normal operations compared to the other two crypto lenders, which are about to stop operations completely.

On July 11, crypto hedge fund, Pantera Capital (PC), released a blockchain-focused letter called “DeFi worked great.” The report is a contrary opinion to a wall street journal report titled “DeFi has an existential problem.”

The Pantera Capital report claimed that DeFi protocols’ performance during this crypto winter has been much better than their CeFi counterparts. The report explained that the practice of over-collateralization and the high level of transparency is why the claims above are valid. However, Blockfi CEO, Zac Prince, took to Twitter to react to the report.

BlockFi Will Succeed: Zac

The Blockfi CEO said it is wrong for pc to include Blockfi as one of the failed examples of CeFi platforms. He added that Blockfi operates differently compared to insolvent companies like 3AC and Voyager. He also said the crypto lender doesn’t use its users’ funds to earn high yields from its DeFi operations.

The pc report admitted that DeFi platforms are superior to their CeFi counterparts as an alternative for borrowing and lending. However, it accused some DeFi protocols, especially Blockfi and Celsius, of running a tricky business. They had business relationships with counterparties who would invest funds into their DeFi protocols.

The problem with that operational procedure is that these DeFi protocols might have to lie or ghost their users when they cannot pay back their loans as enforced by the smart contracts. Based on this premise, the lack of transparency by these DeFi platforms puts users’ funds at risk.

This scenario proves that DeFi customers can’t be affected by similar schemes. The reason is that they can monitor the protocols to understand the transactions they are executing on the blockchain. The report claims that DeFi protocols didn’t experience a massive crash like the centralized crypto lenders because of the features of blockchain technology.

“DeFi applications can’t run away with funds due to visibility, transparency, and accountability on the blockchain. Also, no DeFi application can deploy a strategy without an agreement with its retail investors. In addition, there is no way such DeFi apps can be under-collateralized without any investor knowing about it.”

By contrast, CeFi lacks transparency. Hence, investors depend on market rumors to know how CeFi lenders invest their money. The automated execution mechanism gives DeFi protocols an advantage over their CeFi counterparts. Furthermore, DeFi protocols have over-collateralized assets. Thus, a market crash can’t cause a shutdown of the system even when liquidity shrinks.

It’s Not What it Looks Like

However, Blockfi CEO, Zac Prince, stated that the PC’s report is misleading as it puts Blockfi into a similar category as other popular failed crypto companies. Prince argued that pc was wrong in classifying Blockfi with Voyager and Celsius as the crypto version of the Lehman brothers.

Prince further said Blockfi never uses users’ deposits to run its DeFi operations. Many failed crypto lenders usually use this method to earn huge returns for their clients.

Prince further stated that Blockfi’s operations keep running like never before. The company’s products (loans, trading, and interest-earning) are still available. He concluded that Blockfi isn’t about to crash as PC claimed. Prince argued that PC’s claim that DeFi is perfect is completely wrong.

Prince cited the example of the crash of terra’s anchor protocol. That collapse also negatively affected many other crypto firms. The Blockfi CEO adds that there are still issues CeFi platforms can solve that DeFi platforms cannot. In his conclusion, Prince noted that the CeFi business model would continue despite the chaos around CeFi platforms.

Rebecca Davidson Verified

Rebecca is a Senior Staff Writer at BitcoinWisdom, working hard to bring you the latest breaking news in the cryptocurrency market. In the words of Elon Musk “Buy stock in several companies that make products & services that *you* believe in. Only sell if you think their products & services are trending worse. Don’t panic when the market does. This will serve you well in the long-term.”

Latest News