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Decentralization, Permissionlessness, Neutrality and Censorship Resistance: DeFi’s Founding Principles Put to the Test

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Decentralization, Permissionlessness, Neutrality and Censorship Resistance: DeFi’s Founding Principles Put to the Test

On September 24, attackers drained $387.5M from Bitget’s hot wallets. Within a day, part of the funds were already being bridged and swapped across numerous assets, including XRP, ETH, BTC, USDT and USDC, through venues such as THORChain, Uniswap, Chainflip, NEAR Intents, 1inch and LayerZero.

Following the hack, Bitget CEO Gracy Chen published the attacker addresses and formally asked THORChain to refuse them service. THORChain declined. Its position is that the protocol is open to anyone by design and doesn’t filter who uses it, and the emergency halts that protect the protocol can’t be used to freeze particular funds. It added that the attackers behind its own May exploit, which took $10.7M from its pools, were never blacklisted either and kept swapping freely.

The refusal reignited the debate around DeFi, neutrality, decentralization, and what protocols should or shouldn’t do in these situations. What stands out is that no side is clearly right or wrong, it’s more of a stance.

That makes this a good moment to revisit the values behind decentralized finance, starting with Satoshi’s whitepaper, and show why they now operate more as a spectrum. Protocols sit at different points along it, and each point carries a cost. We then look at how the venues involved in the Bitget hack acted relative to their stated ethos and promises. MistTrack’s tracking of the funds lets us draw a clear picture of the situation as it stands two weeks later.

For protocols built on a decentralized ethos, neutrality is credible only if no single party holds the power to change the rules.


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