Author: On-chain highlights
Introduction: A ghost that cannot be ignored
On the ancient chessboard of capital and power, a "ghost" is quietly wandering. Born from a sea of code, nurtured by the ideal of decentralization, its name is DeFi (decentralized finance). We've long viewed it as a disruptor of the traditional financial empire, a parallel universe filled with tech geeks and myths of wealth. We marvel at how it uses smart contracts to construct a trustless, self-executing financial Lego world, but we're also wary of the bubbles and scams that flourish within it. However, while we're still debating whether DeFi is the dawn of a financial revolution or the twilight of a Ponzi scheme, it has already quietly crossed the line. Its tentacles are no longer content to challenge the ironclad walls of Wall Street but are now reaching out to an even older and more fundamental realm—political power. With the listing of WLFI spot trading on exchanges, a future both exciting and terrifying is revealed: when strings of cold code begin to possess the power to influence and even shape national will, what turbulent times will the world order as we know it face? This isn't just another story about cryptocurrency; it touches upon a wide range of crucial issues, including sovereign freedom and the future of power. From Code to Capital—How Does DeFi Forge a New Financial Paradigm? To understand how DeFi intersects with political power, we must first understand the source of its power. The essence of DeFi lies in shifting trust from traditional centralized institutions like banks and governments to the level of open, transparent, and immutable code. This new paradigm, where "code is the rule," has given rise to an unprecedented capital structure and mobilization model. The expansion of the power of traditional financial giants and multinational corporations is based on vast employee networks, complex legal structures, and delicate interactions with multiple governments. In contrast, the accumulated power of DeFi projects, especially the leading ones, demonstrates a starkly different trajectory, exhibiting a more astonishing exponential growth. Compared to some national stock exchanges, the decentralized exchange Uniswap's daily trading volume rivals or even surpasses them during peak trading periods. Leveraging the UNI governance token, community members collaboratively manage their treasury, easily accumulating billions or even tens of billions of dollars. Fund allocations are made solely through on-chain voting by community members, eliminating the need for cumbersome boardroom decision-making processes and unaffected by the will of any sovereign state. In his article "World Liberty Financial: When DeFi Meets Political Power," Gassrobert argues that the WLFI concept has been taken to an unprecedented level, centered around the creation of a "decentralized sovereign wealth fund." This fund would be owned by global citizens and rooted in DeFi protocols. This vision outlines a grand vision for capital: rather than being controlled solely by any single country, assets would be intelligently managed by the world's leading DeFi protocols to achieve value, while decision-making power would be widely dispersed among token holders worldwide. The other side of this double-edged sword: the awakening and backlash of the state apparatus. Faced with the rapid rise of the emerging field of DeFi, those in traditional political power are by no means indifferent. The clash between DeFi and political power is a complex and ever-changing struggle, intertwined with multiple aspects such as suppression, borrowing, and application, resulting in a more volatile and volatile contest. The primary response strategy has been regulation and containment. Previously indifferent, governments and financial regulators have now shifted to a deep sense of vigilance. From the increasingly stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations implemented by various countries on cryptocurrency trading platforms, to direct sanctions against protocols like Tornado Cash that obfuscate fund flows, to the US Securities and Exchange Commission's (SEC) rigorous investigation into whether tokens constitute "securities," all these actions demonstrate the state's unwavering resolve to tame this uncontrolled torrent within established order. The state's position is straightforward: no capital flow escapes scrutiny, and all financial operations must be regulated. The sovereign's hand hangs ever-higher over DeFi protocols that attempt to undermine the dominance of national currencies, ready to strike back harshly. Some countries have already actively explored the potential of DeFi, transforming it into a new bargaining chip in geopolitical competition. Certain countries facing sanctions from traditional financial systems may view cryptocurrencies and DeFi as key avenues for circumventing blockades and promoting international trade and capital flows. Striving for leapfrog economic development, these countries may actively foster a legal environment conducive to DeFi's development, aiming to attract crypto capital and professional talent from around the world. Therefore, simply "disrupting" and "being disrupted" are far from enough to capture the entanglement between DeFi and political power. In a complex interaction, it seems more like a process of infiltration, borrowing, and reshaping. In the future, the state apparatus may become a DeFi adopter. It is gradually awakening to the double-edged sword of being both a DeFi imitator and its regulator. While it can rip the old order apart, those in power in the old world may also sharpen it into a more potent governance tool. Towards a digital citizenry utopia, or sinking into the arena of cyborgs? From this discussion, it's easy to see that the fusion of decentralized finance (DeFi) and political power paints two distinct and potentially conflicting visions for the future of human society. In this brilliant picture of an ideal utopia, decentralized organizations led by "World Free Finance" break down the boundaries of nation-states, allowing global citizens to break free from the shackles of geography and identity and work together to manage and distribute global resources. This vision foreshadows a new possibility: a model of fair, transparent, and efficient global governance, where funds are no longer needlessly bogged down in cumbersome bureaucratic systems but instead flow precisely and efficiently to where they are most needed, whether funding cutting-edge scientific research or aiding regions devastated by natural disasters. Individual wealth and power are not confined to the nationality of the passport held at birth, but rather rely on contributions to and participation in the global digital economy. This is undoubtedly the highest expression of the ideal of globalization in the digital age. The other scenario offers a profound warning against a dystopian world, where the concept of "decentralized governance" has been transformed into the naked hegemony of capital. The picture it depicts is even more bleak and increasingly close to reality. The barriers of the "digital oligarchs" are actually built by a small number of "whales" and institutions that control vast amounts of tokens. Using DAOs as a capital tool, they can freely influence their targets and easily sway voting processes to satisfy their own selfish desires. This blatantly tramples upon the internal autonomy of small nations and erodes the foundations of democratic decision-making in sovereign states. Instead of gaining greater freedom, ordinary people are trapped in an even harsher "cyborg arena" dominated by anonymous capitalist behemoths. With the deep involvement of state power, the once transparent blockchain has transformed into an impenetrable surveillance weapon, leaving people to realize that they are ultimately mere "digital slaves" under the iron hoof of vast algorithms and the will of capital. Between these two extreme paths, the future trajectory is likely to unfold along a winding middle path, a crisscross of conflict and reconciliation. The power of DeFi can no longer be easily constrained within existing frameworks. With the opening of the Pandora's box of WLFI, we are forced to confront a harsh reality: have concepts like "world free finance," the rise of blockchain and decentralized finance, profoundly reshaped the underlying logic of power? The impact of this transformation is by no means limited to the financial sector; it will deeply touch every aspect of social structure, encompassing a new interpretation of individual freedom, the evolution of corporate organizational forms, and even the reshaping of national sovereignty. This is no longer a game reserved for speculators or tech enthusiasts; it is a reality that demands urgent recognition. Policymakers must embrace an unprecedented openness and adapt accordingly, actively exploring and gaining a deeper understanding to adapt to this transformation rather than blindly blocking or rejecting it. For the general public, whether you hold cryptocurrency or not, you have been invisibly swept into this tide of the times. The DeFi wave is surging, and whether we are prepared or not, this grand chapter in the future of power has already quietly begun. You and I are part of this, both spectators and participants.