The DeFi Black Swan Explained

Black Swan


  • Black swan refers to an industry catastrophe
  • DeFi ecosystem continues to become a likely victim to black swan events
  • The 2016 ‘THE DAO’ attack is the most significant black swan event

In the investment world, black swan is a term used to refer to an industrial catastrophe that may or may not occur. However, if the event occurs, its occurrence's timing and avenue would be almost impossible to predict.

There has been an increased discussion on black swans in the world of cryptocurrencies, especially in the Ethereum ecosystem, as decentralized finance continues to grow in popularity over the last two years. As the popularity of DeFi continues to grow, the amount of Ethereum locked in different DeFi protocols has continues to grow, making these protocols attractive prize pots for hackers.

The famous 2016 hack of ‘The DAO’ is an excellent example of a black swan event that took the crypto world by surprise and depressed the price of ETH, leading to the Ethereum division.

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