The Great Unmasking: let’s find out together how much De is in our Fi

“One of the best ways to achieve decentralization is to expose centralization.”

– Julien Assange (on justice/injustice)

“How decentralized is this really?” has been an age-old question in DeFi. Until now, it was up to each user to form their own opinion for each protocol: an exceptionally technically demanding full-time job. We’ve built DeFiScan precisely to address this, and enable anyone to get both a quick overview of the decentralization status of a given protocol (the five dimensions metrics and their respective risk level), and a full detailed and sourced rundown (the report).

With 8 protocols already reviewed and 7 currently in the process, we’re thrilled to see the positive reception of the framework and its adoption amongst responsible builders who are now starting to self-review. However, we believe it’s time to scale DeFiScan further, with the introduction of a new stage: Others.

What does an “Others” decentralization stage mean?

The DeFiScan framework has a few requirements to enable the analysis to be performed. Starting now, a review of Others grade will be published for the protocols that do not meet the stage 0 requirements.

Others = does not meet the stage 0 requirements

Simply put, the five Stage 0 requirements are bare minimal practices that a protocol must observe even to be qualifiable of “DeFi:

1. Blockchain-based, financial technology – else there is nothing for us to review.
2. User assets are not in custody by a centralized entity – else we can’t access the risk created by the centralized custodian.
3. Public documentation exists that outlines the protocol and its expected performance – having accurate and up-to-date documentation is not only a responsible practice but also facilitates the DeFiScan review of the protocol.
4. Source-available codebase – without access to the source code, the protocol is essentially a black box to its users and to us.
5. Verified contracts – another good practice that, in our case, enables us to ensure that the smart contracts reviewed are indeed the ones used by the live protocol instance(s).

While these five requirements seem consensual and minimalist, many protocols do not meet them. Thus, we decided to explicit the Others stage to broaden the scope of analysis of DeFiScan; on top of telling you how much “De” is your “Fi”, DeFiscan is now able to tell you if there is any “De” at all**.

Others Logic

The Others stage has a special status in the framework, operating under a different logic. Stage 0, 1 and 2 are based on requirements to be met: if they are, the protocol is awarded the corresponding stage. Allocating a stage requires completing a full and exhaustive analysis of the protocol. Others, on the other hand, works more like eliminatory criterion: failing on any of the five requirements is sufficient to classify a protocol as Others, without conducting the full analysis (that cannot be conducted until the requirements are met).

Our goal with this endeavor is not to shame and condemn such protocols but merely to explicit their decentralization status and provide a more comprehensive overview of the current landscape of blockchain-based financial technology. If a given protocol, initially classified as Others, was to be updated to meet the Stage 0 or above requirements, our team would be thrilled to update the review. Overall, the objective of the DeFiScan team remains to maximize the amount of maximally decentralized protocols, and providing clear unbiased information about decentralization stages is one of the best levers to pull to achieve such a result.

Expliciting the Others decentralization stage will help to nurture a healthy competition for protocols to reach stage 0 or higher, and thus eventually establish stage 0 as a standard.

Introducing: The Great Unmasking

Introducing the Others stage also enables us to broaden the scope of who can contribute to DeFiScan. Finding an Others protocol simply requires proof that at least one of the five stage 0 requirements is not met.

So to spice things up, we’d like once again to call to the community to contribute, and we will reward those who do so. The Great Unmasking is an incentivized Others stage protocol discovery campaign: any sourced and factual report of a Others stage, concerning a protocol that is not already reviewed, and handling at least $10M of assets (TVL) on an EVM-chain will be rewarded with 100 LUSD. To ensure broad participation in the campaign, submissions are limited to up to 5 per individual. In practice, that means finding:

1. Critical unverified contracts
2. Assets in centralized custody
3. Essential function undocumented
4. Non-source available code

For the first trial of the great unmasking, we are allocating a 10,000 LUSD budget, enabling to reward up to 100 submissions. If the campaign proves successful, we will happily scale it further.

Submissionss are expected on DeFiScan repository, and if you have any questions, hop on the DeFiScan Discord channel.

We look forward to reviewing the community submissions and opening the great unmasking ball with a surprising finding: the first protocol for obtaining the dreaded Others grade is no less than… Uniswap V3 on Arbitrum! Indeed, Uniswap’s Arbitrum deployment harnesses unverified smart contracts for critical functions involved with the NFT LP positions (NFTDescriptor - 0x42B24A95702b9986e82d421cC3568932790A48Ec, Multicall - 0xadF885960B47eA2CD9B55E6DAc6B42b7Cb2806dB, and NonfungibleTokenPositionDescriptor - 0x91ae842A5Ffd8d12023116943e72A606179294f3).

While it’s unlikely that it stems from ill-intent from the Uniswap team, having those contracts unverified prevents us from analyzing their code, and thus makes it impossible to conclude anything regarding the risk level they pose. We hope the contracts will be verified shortly, enabling the full analysis to be conducted.

Meanwhile, all eyes are on you, DeFi enthusiasts and decentralization enjoyers: what other surprises are we to find? You tell us, and earn your share of the 10,000 LUSD!