Decentralization is a valuable property to have in DeFi. Trust minimization means users don’t need to trust a counterparty, just the code. This is especially powerful for cross-border finance where institutional trust is low.
Progressive decentralization is the pragmatic path most successful protocols follow. Start centralized for speed and security, then gradually hand control to the community as the protocol matures (Uniswap, Aave, etc.).
However, rapid incident response is much harder with decentralized governance. When exploits happen, centralized teams can patch and deploy in hours. DAOs might need days to pass a proposal.
In addition, centralized entities can carry insurance and be held legally accountable. Fully decentralized protocols exist in a legal gray zone where users have limited recourse after a hack.
And there is the “decentralization theater” problem: many protocols claim decentralization but have multisigs controlled by a small team, or token voting dominated by insiders. The label matters less than the actual power distribution.
