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The FUNDAMENTAL premise of DeFI: KNOWLEDGE over TRUST
Knowledge trumps trust for guaranteeing the robustness of a system. Thus, going forward, we should ensure replace trust & paper promises with knowledge-based solutions.
The fundamental premise of Decentralized Finance (DeFi) is that knowledge trumps trust for guaranteeing the robustness of a system: knowing that something is true is always superior to just hoping, believing, or trusting that it is.
Understanding the implications of this concept is critical, since everything around us is currently based on trust & paper promises, made by individuals, financial institutions, and governments. Employers promise to pay your salary, banks promise to safeguard your money, and governments promise to protect your financial rights against violations.
So, what is the problem?
Trust is not enforceable. Trust is optional and is based on goodwill. Anyone can make promises.
Most of the time, that is not a problem. You can mostly trust that your counterparty will fulfill its side of the deal.
But just some of the time, things go south. And when things go south, they tend to impact people quite negatively.
This wouldn't be the case with the vastly superior, knowledge-based alternatives, as people would be aware of what's going on and would be able to act in time, potentially preventing a rough awakening, which tend to come with massively unpleasant consequences.
Therefore, to make our systems more robust, we would need to incorporate the fundamental premise of DeFi and aim to replace our centralized trust with transparent and decentralized knowledge.