Anonymous Teams in DeFi, a Blessing, or a Curse?

Hey DEFI TIMES community,

There are quite a lot of DeFi projects that have anonymous teams, which is often considered a no-go.

However, the opposite is true. Today’s guest writer is the founder of OctoFi.

OctoFi’s team is anonymous and the project has continued to ship amazing products. The token has been an incredible investment since the launch.

Anonymous teams can be an advantage for a project that seeks to be decentralized!

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Anonymous teams in DeFi, a blessing, or a curse?

One of the main principles behind cryptocurrency is to create a peer-to-peer network that doesn’t require a middleman to transact between two people. However, until early last year we still saw a huge reliance on centralized exchanges.

2020 saw exponential growth for DeFi, with slightly below $700M total value locked in January to over $20B TVL in DeFi protocols. 

The major protocols in which value is locked include:

  • $3.74B in Maker

  • $2.65B in Aave

  • $2.53B in Uniswap

  • $2.44B in Compound

  • $2.01B in Synthetic

DeFi brings various advantages over centralised finance (CeFi). It’s open-source, anyone can contribute, transactions are trustless, and access is permissionless.

However, we still know the faces behind the hugely popular protocols mentioned above. This has both advantages and disadvantages. An advantage for example is that it’s possible to do research to the team’s experience. A huge disadvantage behind knowing the team however is the risk of targeted attacks. Such as the one that happened to the founder of Nexus Mutual in which over $8M was stolen.

Can an anonymous team be trusted?

Where DeFi saw growth, scammers saw an opportunity. Unfortunately, we’ve seen plenty of DeFi (and cryptocurrency) projects in 2020 with anonymous teams, who raised money and completely disappeared after doing so. Leaving the contributors with nothing but dust. 

However, it’s completely possible to prevent becoming a victim of these scams. Realistically, there is no need to trust a team if you can verify all of their work. DeFi platforms are open-source. Therefore, it’s possible to do full due diligence on smart contracts to ensure there are no red flags.

A project with an anonymous team boasts one major advantage. It makes you focus on the product and ecosystem, rather than leaning on founder reputations. It empowers the project to stand on its own, even if a genesis team were to step away from the project. It offers the ability of complete decentralization, with fewer potential ways of shutting it down.

Could you provide an example of such a project?

OctoFi is an example of such a project. The OctoFi team decided to remain anonymous because they want to build a fully decentralized project. Thus, enabling their token holders and community members to decide the future of the platform they’re building.

OctoFi recently launched its 2.0 release. It’s completely open-source and powers its users with decentralized finance tentacles to aggregate thousands of DeFi opportunities. It empowers them to invest in DeFi from a platform they own, without exposure to the typical token dilution synonymous with venture capital (VC) backed projects. In fact, they want to assist their community members to do competently research these aggregated opportunities, by providing them with the required tools to do so on their all-in-one community platform (due for launch at this weekend’s AMA).

For example, their due diligence checklist (work in progress) includes important items to look at, immediate red flags, and handy links. We would recommend adopting a process involving a simple checklist such as theirs, not only for projects that are powered by anonymous teams but for any project you’re researching.

Summarized, there are advantages and disadvantages to both non-anonymous and anonymous teams. Ultimately, what’s important is the product, the smart contracts, and overall ease of use. DeFi offers clear advantages over CeFi. But it’s up to the community to further explore all the additional benefits and features DeFi is poised to offer.

OctoFi recently announced ‘The Tentacult Manifesto’ to demonstrate their eight guiding principles, provide deeper insight on what they mean for the project moving forward, and share details for attending their upcoming AMA on January 16 at 8 pm UTC.

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All information presented above is meant for informational purposes only and should not be treated as financial, legal, or tax advice. This article's content solely reflects the opinion of the writer, who is not a financial advisor.

Do your own research before you purchase cryptocurrencies. Any cryptocurrency can go down in value. Holding cryptocurrencies is risky.