Andrei Kronger says "DeFi" is gone and the era of on-chain finance has arrived

Andre Cronje: Most DeFi has deviated from the essence of "truly decentralized finance"

Andre Cronje, founder of DeFi platform Flying Tulip and founder of Fantasy Network, said that "most" decentralized finance no longer meets DeFi's strict definition. At Cointelegraph's Chain Reaction X Spaces event, Cronje pointed out that true DeFi should be decentralized, untamperable, and non-intermediation-he believes that many current mainstream protocols no longer meet these conditions.

The comments come amid growing industry concerns about DeFi governance centralization and real-world control. Data shows that DeFi activity has cooled significantly in the past year. According to statistics from DefiLlama, DeFi's total locked position value (TVL) has dropped from approximately US$167 billion in early October 2025 to approximately US$75 billion, a drop of more than 50%.

Core Views

Andre Cronje believes that most current DeFi relies on intermediaries and decision makers, deviating from the "real DeFi" model. He described the shift as an evolution towards "on-chain finance or open finance" rather than a continuation of the original DeFi philosophy. DefiLlama data quoted in the discussion showed that DeFi TVL has shrunk by more than half in the past 10 months, reflecting weakening market momentum. The European Central Bank's analysis questioned the degree of decentralization of the DAO, pointing out that top-level governance token holders control most of the supply. The focus of controversy is increasingly on whether emergency control mechanisms, centralized governance and protocol dependence should remove DeFi from the scope of regulation.

From "decentralized finance" to "open finance"

Cronje's core argument is that DeFi has deviated from its original design principles. In his view, many protocols that claim to be decentralized already include centralized elements in practice-such as a company or other entity acting as a decision-maker, manager, or risk manager. "We have long since said goodbye to (the real DeFi). Because now intermediaries are companies, decision-makers, managers, risk committees-these are common roles in traditional banking."

This view is important because it shifts the discussion from user interfaces and token governance to practical mechanisms for controlling execution and risk. When "decentralization" is defined as the absence of discretionary intermediaries, the core question becomes: Is today's DeFi protocol just an automated shell of off-chain power? Or is it a truly trustworthy architecture that minimizes interference?

Cronje does not assert that the concept of true DeFi is dead. He believes that while the entire ecosystem has shifted to a different model, there are still some agreements that demonstrate true innovation within their definition.

Why the industry debates about "circuit breakers" versus control mechanisms

This criticism is not new to Cronje. Earlier this year, he said that DeFi in the strict sense of the term "is no longer DeFi," while developers are still debating whether circuit breakers and other emergency measures must be introduced to protect users from vulnerabilities. While these controls can improve safety, they also raise practical questions: Who can trigger them? How big is discretion? Will they reintroduce centralized authority into systems that boast decentralization?

Contradictions are becoming increasingly apparent. If protocols are forced to rely on mediated responses to handle security incidents, the "immutability" of true DeFi becomes difficult to justify. At the same time, when real-value systems and complex smart contracts face marginal situations where they can be exploited, users and developers may believe that the ability to intervene urgently is inevitable.

DeFi TVL contraction exacerbates doubts

Although some of the decentralization discussions involve philosophical aspects, data suggests that expansion across the ecosystem has slowed. DefiLlama data cited in the discussion showed that DeFi TVL has dropped from approximately US$167 billion in early October 2025 to approximately US$75 billion-an overall decline of more than half in 10 months.

The decline in TVL does not directly prove the failure of decentralization, but it does confirm that the focus of cryptofinance has shifted. When capital and liquidity are concentrated in other areas-whether centralized platforms, tokenized markets, or other on-chain sectors-protocol governance centralization and dependence on risks often attract more rigorous scrutiny from investors.

For market participants, the decline in TVL has also changed the incentive mechanism behind governance. As less money flows into agreements, participants may be more inclined to risk averse decisions or rely on centralized operators-especially if recovery and security mechanisms need to be coordinated.

Regulators and academia focus on DAO centralization

Cronje's comments coincide with concerns previously raised by institutional researchers. In a working paper published in March, the European Central Bank questioned whether decentralized autonomous organizations (DAOs) are sufficiently decentralized to be able to escape the scope of regulation.

Based on the paper, the researchers analyzed Aave, MakerDAO, Ampleforth and Uniswap and found that the top 100 governance token holders in each agreement controlled more than 80% of the supply. The analysis is based on snapshots of positions in November 2022 and May 2023. The ECB authors point out that these findings challenge the concept of "inherently decentralized" and also question whether the DAO should be seen as a fully decentralized service and thus not subject to the EU's Cryptographic Asset Markets Regulation Act (MiCA). In other words: Even if agreements use token voting and smart contract execution, centralized governance may still mean that power is actually in the hands of a relatively small number of participants.

This is critical to the practical question facing investors and users: When primary influence is highly concentrated, to what extent should trust in the permission-free nature of governance be established? If decentralization is measured not only by code architecture, but also by the distribution of influence, then centralization becomes a key regulatory and compliance issue.

Future Focus

The debate over "real DeFi" is expected to escalate further as the agreement seeks a balance between security controls, governance engagement and real-world operational dependence. Investors should pay attention to how builders define decentralization in detail-especially in terms of emergency powers and governance centralization-and see whether regulators will view "token-based coordination" as decentralization in the true sense of the word while custody, influence, or intervention remain highly concentrated.