Summary
DeFi platforms face a dilemma between implementing paternalistic risk management measures to protect users and allowing the invisible hand of the market to regulate risk. Balancing these approaches is key to ensuring the stability and growth of the DeFi ecosystem.
Key Points
1. DeFi platforms must strike a balance between protecting users from risks and allowing for market forces to operate freely.
2. Implementing paternalistic measures, such as mandatory insurance or limits on leverage, can help mitigate risks for users in DeFi.
3. However, excessive paternalism can stifle innovation and limit the potential benefits of decentralized finance.