Can DeFi threaten Cardano's security?

Cardano’s security is based on ADA coins’ distribution and market value. This is based on the assumption that one entity cannot quickly and cheaply acquire a supermajority of all coins. The demand for ADA coins increases the market value, making a potential attack more expensive. There is one clever attack vector. It is possible to create a DeFi service offering a higher yield than delegators can get for staking ADA. For example, it could be a lending platform that offers a 10% yield for the ADA coins you provide to the service. Such a DeFi service would directly compete with staking. The service would siphon ADA from the staking and thus theoretically weaken the security of the PoS protocol. Can an attacker get the required number of ADA coins to attack in this way?


Trying to obtain a supermajority of PoS coins through the DeFi service is a theoretically possible attack, but very likely unfeasible in practice. The attack would be very costly and it would be necessary to create the most attractive service on the market.

This article was prepared by Cardanians with support from Cexplorer.

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