The promise is seductive: DeFi, simplified. Affluent is a new, Telegram-based crypto app, helmed by former TON Foundation executive Justin Hyun. It provides millions of Telegram users the compelling prospect for easy, instant yield farming. Deposit, click, and watch your crypto grow. Sounds easy, right? Too easy, perhaps. It sounds a lot like those cheesy late-night infomercials that offer you piles of cash for doing virtually nothing. We all know how those typically go!

Is This Just Fool’s Gold?

We're talking about people's life savings potentially being entrusted to an app promising simplified access to a notoriously complex and volatile market. Affluent's "Strategy Vaults" and "Vault Managers" – these terms mask a level of automation and abstraction that should immediately raise red flags. Are users really well-informed as to what they’re spending their money on? Are they aware of the risks associated with lending protocols at play here? Or are they just being duped into unthinkingly trusting the app to make the proper decision?

This is not simply a lack of financial literacy, rather an emotional vulnerability. High yields are so attractive they can turn your analytical thinking brain into a mushy puddle of excitement. This temptation becomes increasingly powerful as distracting visualizations effectively downplay the true associated dangers. We know that casinos employ a psychological sleight of hand to keep you playing. They keep you occupied with bright colors and mindless gameplay while they harvest their millions. Are Telegram users being lured as moths to the flame by DeFi’s unfulfilled expectations of easy fortune? These investors otherwise will be left holding the bag when the market inevitably turns.

TradFi Savior or DeFi Wolf?

IndieGoGo Affluent, which launched at Disrupt, highlights the prowess of co-founder Hyung Lee’s traditional financial experience. This frank, realistic analysis introduces some much-needed risk management to the wild west realm of DeFi. They point to the isolated lending pools and security audit by Trail of Bits as proof of their commitment to security. Is it really possible for TradFi principles to reign in the wild west that is DeFi?

I’m reminded of the 2008 financial crisis. Wall Street used to believe that it had figured out risk management through the use of complicated derivatives and securitization. Turns out they were just hiding the risk in the shadows where no one was looking, until the whole system collapsed. Aren’t “isolated lending pools” just another type of financial engineering? They are designed to limit the fallout during crises, but will they actually stop the more dangerous risks lurking below the surface?

As much as we might need security audit, it’s still no sure thing. Audits are snapshots in time. But they don’t take into consideration future vulnerabilities or hidden, unknown exploits. The asynchronous design of the TON blockchain is claimed to remove the risk of flash loans. Supposedly. Maybe not—history is replete with tales of “unhackable” systems being exploited.

Democratization Or Calculated Exploitation?

Affluent wants to make their product approachable to users of all backgrounds and knowledge levels. The goal is laudable: to democratize access to DeFi. Is this democratization really democratization if it is done at the price of informed consent? Are we really empowering users or, with these tactics, are we instead just preparing them to be more effectively exploited?

Now picture a single parent, just trying to get by, seduced by the siren call of passive income. New players redeem all of their savings into a Strategy Vault, with the hope of generating higher returns to pay their rent. Then the market crashes, or a vulnerability gets exploited, and they lose it all. Democratization, or predatory capitalism in sheep’s clothing as financial inclusion?

I'm not saying Affluent is intentionally malicious. The potential for unintended consequences is equally, if not more, expansive. Or are they creating requirements that make DeFi so simple it would be bordering on opaqueness. Otherwise, it risks establishing a new system that grows on user trust and feasts on user confusion. The line between democratization and exploitation is quite fraught. Line not to be crossed. We need to be very, very careful that we do not overstep that line.

We’re going to need a lot more scrutiny, a lot more transparency, and a lot more education before we can really start partying over “easy DeFi.” So when it comes to spending your hard-earned taxpayer dollars, keep in mind that you get what you pay for. There is no free lunch or yield to take!