Are Cryptocurrencies and Decentralized Finance Democratic?

This chapter defines the building blocks of Web3 to explore its implications for sustainable democracy. It explains the crash of the Terra ecosystem and compares it with the implosion of FTX, both to underscore the dark side of networks built on blockchain technology and to illuminate how all cryptocurrencies (crypto), as well as all investors, are not created equal. The chapter weighs the costs and benefits of crypto and decentralized finance (DeFi) at the present moment and explores emergent regulation. It argues that cryptocurrencies and DeFi will only serve democracy if governments and international organizations establish the right incentive structure for innovators and safeguards for investors in this space.