There are a lot more backstops. Traditional finance can have this problem, but we can install human systems to limit the blast radius of things. As you say, it is traditional finance on steroids.
Crypto enthusiasts seem to think it is the opposite. People tell me that defi loans are "zero risk" because of the automatic collateral systems and I just laugh and laugh.
Crypto finance and especially DeFi is tiny compared to traditional finance. The blast radius is still small without the regulations. But the regulations will come. Crypto finance is going down the same path that traditional finance did just in a period of a few years than a century.
Everybody who claims there's "zero risk" is either lying or blind to the risks. You can't get those large yields with zero risk.
There are a lot more backstops. Traditional finance can have this problem, but we can install human systems to limit the blast radius of things. As you say, it is traditional finance on steroids.
Crypto enthusiasts seem to think it is the opposite. People tell me that defi loans are "zero risk" because of the automatic collateral systems and I just laugh and laugh.