DeFi

From Manus, which exploded in popularity early this year, to the recently viral Cos and DeFi, and then to DeepSeek, behind them all is the same logic of turning large models into intelligent agents that can get work done.

The FATF includes DeFi, NFTs and decentralized exchanges in its definition of "virtual assets" and is gradually expanding the scope of application of the travel rule.

In DeFi scenarios, transactions are initiated by anonymous wallet addresses, smart contracts execute automatically without intermediary review, and there is no legal entity called a "customer" on-chain, so UBO identification has almost no anchor point.

In the crypto asset sector, the metrics for evaluating a platform's success must shift from mere trading volume to the provable robustness of its governance and the structural integrity of its asset custody model.

Governance mechanisms (approval workflows) must run in a trust domain isolated from the main trading engine to truly withstand privilege escalation attacks.

Despite years of fintech development, control over information and transactions remains concentrated in the hands of large enterprises and financial institutions, which is the background against which DeFi is proposed as an alternative.

Web3 and DeFi are still in an early stage, and infrastructure performance, regulatory frameworks, and user experience all have many unresolved issues; the operational barrier to decentralized applications is significantly higher than that of traditional internet products.

DeFi (decentralized finance) is built on the same blockchain foundation as Web3, with the goal of providing a financial services model that is safer and more efficient than traditional financial institutions, letting users create their own decentralized financial applications to participate in the value distribution of the digital economy.

DeFi's permissionless nature means that anyone with an internet connection can access financial services such as lending, trading, and wealth management without going through review by traditional financial institutions, but users must bear the risks of private key management and smart contracts themselves.

Smart contracts carry the risk of code vulnerabilities, which attackers may exploit to move funds, and on-chain transactions are usually irreversible, making losses hard to recover; therefore, whether a project has undergone sufficient auditing and whether its contracts are upgradeable are important references for users assessing risk.

Web3 and DeFi share the same technical foundation, blockchain; Web3 provides decentralized infrastructure at the identity and data layers, and DeFi builds financial applications on top of it, with the two supporting each other.

DeFi project teams typically propose a condition: if the hacker returns the vast majority of the funds, they may keep typically 10%–20% as a bug bounty and will not pursue legal liability.

As composability between protocols increases, a single vulnerability may be amplified through cross-protocol interactions and trigger a chain reaction.

Even after multiple rounds of professional audits, DeFi projects cannot guarantee that their code is absolutely secure.

Gamdom (a crypto casino platform) suffered a security breach in which about $3 million in funds was transferred without authorization, and its services were immediately suspended.