DeFi does not magically allow leverage without losses. And even for platforms without an intermediary, DeFi permits 0 new payoff profiles. But too many users still do not understand some basic constraints about markets.
DeFi can mechanically rearrange how things work. And it might be able to widen participation in "the system" for some definitions of "the system." But overall DeFi is far more effective at rearranging the assignment of responsibility for transactions than it is for rearranging overall economic outcomes.
The October 10th liquidations – and, more importantly, people's responses to those liquidations – demonstrate that a large slice of the web3 ecosystem still does not understand the ways in which DeFi is not new. And, perhaps more importantly, the ways in which people still seem to believe in magic.
