Andre Cronje says much of decentralized finance is “no longer DeFi” in the strict sense as builders debate whether circuit breakers and other emergency controls are now necessary to protect users from exploits.
The Flying Tulip founder told Cointelegraph that many protocols are no longer immutable public goods but rather “teams running for-profit businesses” with upgradeable contracts, off‑chain infrastructure and operational controls. That shift changes the security model: early DeFi relied on immutable smart contracts, while newer systems often depend on proxy upgrades, multisigs, infrastructure providers, admin processes and human response teams.
“I think what we have today, Flying Tulip included, is no longer DeFi. It’s not decentralized finance. It’s not immutable code,” Cronje said. “It’s teams running for-profit businesses.”
April’s DeFi exploits pushed security narratives beyond smart contract audits into operational risk. Flying Tulip added a withdrawal circuit breaker designed to delay or queue withdrawals during abnormal outflows following major incidents involving Drift Protocol and restaking platform Kelp, with estimated losses of about $280 million and $293 million, respectively.
DeFi risks move beyond smart contracts
Cronje said the industry focuses on audits while many systems can be changed by developers or controlled through administrative processes. “The focus over all of the industry is still very much so on the contract side and not sort of the more TradFi side,” he told Cointelegraph, adding that many recent exploits have involved “traditional Web2 stuff” such as infrastructure access, compromises and social engineering.
Protocols with upgradeable contracts need traditional checks and balances: who can upgrade code, who approves changes, and whether proper timelocks and multisig controls exist.
Curve Finance and Yield Basis founder Michael Egorov shared the view that recent incidents show risks increasingly tied to centralization and off‑chain dependencies rather than solely to smart contract bugs. “The vast majority of the most recent DeFi exploits happened not due to errors in code,” Egorov said. “They happened because of centralization risks — single points of failure which live off‑chain.”
Egorov argued that Aave, Kelp and LayerZero smart contracts were not hacked in the rsETH incident; the compromise stemmed from off‑chain infrastructure. He warned protocols face a “whole tree of risks,” with the largest often tied to humans rather than code.
Circuit breakers divide DeFi builders
Cronje said Flying Tulip’s circuit breaker isn’t meant to permanently block withdrawals but to create a response window when outflows exceed normal parameters. “Our circuit breaker isn’t actually designed so that we can stop or prevent anything from happening,” he said. “It’s to give us time to react.” The system gives the team about six hours; smaller or less geographically distributed teams may need 12 to 24 hours. Cronje framed the tool as one layer among audits, distributed multisigs, timelocks and other controls. “Security is always a layered approach,” he said.
Egorov was more cautious. Circuit breakers can make sense in theory but only if implemented without creating a new privileged attack surface. “The circuit breakers are controlled by humans, which means they could become a potential vulnerability themselves,” he said. If emergency controls allow signers to change code or block withdrawals, compromised signers could turn safeguards into drainers or centralized freeze mechanisms. He argued the long‑term goal should be systems that run safely without manual intervention: “The goal of DeFi design should be to minimize human‑centric points of failure, not add to them.”
Standard Chartered says Kelp episode shows DeFi resilience
Standard Chartered characterized the Kelp episode as growing pains rather than a fatal failure. In a research note, the bank said the April 18 theft exposed systemic risks after the impact spread to Aave, but pointed to the more than $300 million raised by the DeFi United coalition and structural changes such as Aave V4 and the Ethereum Economic Zone as signs the sector is developing stronger defenses. The bank added that those upgrades could reduce reliance on bridges, which it described as a major attack vector in recent hacks.
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