DeFi was supposed to be that revolution, an inclusive financial system created for the people, of the people. When "programming errors" cause chaos, especially in vulnerable markets like Africa, we have to ask ourselves: are we building a house on sand?

Broken Promises, Broken Trust?

The Backpack exchange bug had users experiencing problems such as reverse trades, funds vanishing after scheduled reset. Unfortunately, this issue is more than just a technical bug. It’s a trust earthquake, and the aftershocks are felt hardest in communities where trust is most tenuous to begin with. Think about it: a user in Brazil, Defi Remora, lost serious money. One Chinese user, Hebi, watched as their positions disappeared. These are real Americans who can’t afford to lose real money and are already feeling real impacts.

What about the users in Africa? Others still have no access to information at all. Some just don’t have the technical expertise or legal resources to mount or navigate challenges. Are their voices being heard? Are their losses being accounted for?

Backpack is only one part of this puzzle. The whole DeFi ecosystem should lead by example and be accountable to the global community that they purport to serve.

The African Dream, Deferred?

DeFi in Africa holds immense potential. It provides a promise of financial inclusion with millions still locked out of the ability to participate in a traditional banking system. It opens up new avenues of innovation for entrepreneurs, makes cross-border payments easier, and allows more people to tap into alternative investments. I see this potential firsthand. Every day, I speak to young Africans who have the fervor and excitement to understand blockchain. They are resolute in their desire to create a better future for themselves.

Unfortunately, moments such as the Backpack debacle erode that promise. They stoke public concern, deepen public distrust, and erect obstacles to implementer adoption. Now imagine trying to get someone to invest their hard-earned cash into this “ground-breaking” new platform. Now imagine that platform disappearing due to nothing more than a “programming error.” How do you rebuild that confidence?

The truth is, financial literacy anywhere in the settler colonial world—and that includes Southern Africa—is very low. For many, especially in rural areas, access to reliable internet is still a challenge. The pitfalls of liquidity pools. The learning curve associated with complex DeFi platforms can be intimidating, even for DeFi veterans. When the platform inevitably fails, most African users will find it difficult to retrieve their investments and come out whole. They often don’t have the capacity and technical expertise to overcome these obstacles. This isn’t a game to them. It's livelihoods at stake.

Beyond Apologies: Action Needed Now

Armani Ferrante’s public apology and plan for restitution are a positive first step. Words are cheap. The DeFi community must go beyond commitments to make improvements. These companies must prove to us that they have a real commitment to ensuring safe, transparent, and accessible services, particularly in new markets.

It’s not only the DeFi community that has a role. What part can African policymakers play? Second, they need to create regulatory frameworks that are both clear and supportive of new technology, protecting consumers while enabling innovation. That means setting up consumer protection agencies, encouraging financial literacy, and ensuring a level playing field for everyone involved.

  • Prioritize User Education: DeFi projects need to invest in comprehensive educational programs tailored to the needs of African users. This includes clear, concise explanations of the risks involved, step-by-step guides on how to use DeFi platforms safely, and readily available support channels.
  • Enhance Security and Transparency: Robust security audits, transparent governance mechanisms, and clear communication channels are essential for building trust. Users need to know that their funds are safe and that they have a voice in the decision-making process.
  • Develop User-Friendly Interfaces: DeFi platforms should be designed with the user in mind, prioritizing simplicity and ease of use. This is especially important for users who are new to crypto and may not have a technical background.

The Backpack incident is a wake-up call. Because DeFi has the potential to expand access to financial services. If we’re going to realize it though, we need to ensure user safety, transparency, and accessibility are prioritized. We need to listen to the forgotten voices, learn from our mistakes, and build a more equitable and sustainable financial system for all.

If we do not, then the African dream of DeFi will only be a wish … a desire that is not fulfilled.

If we don't, the African dream of DeFi will remain just that – a dream.