USDC first freezes assets in Ethereum Address, triggering discussions on centralization risks in DeFi.

Recently, an incident involving USDC has attracted widespread attention in the industry. It is reported that a stablecoin issuance organization, at the request of law enforcement, has for the first time blacklisted an Ethereum Address and frozen approximately $100,000 in assets at that Address. This action has caused quite a stir in the crypto assets field.

Blockchain data shows that this blacklisting operation occurred on June 16, 2020. Currently, relevant parties have not disclosed more details. According to existing rules, once an Address is blacklisted, it will not be able to receive the stablecoin, and all related assets controlled by that Address will be frozen and cannot be transferred.

According to reports, there are mainly two situations in which an address is blacklisted: first, the address poses a potential security risk or constitutes another threat to the network; second, it is to comply with the laws and regulations of U.S. courts or other governmental authorities with jurisdiction. Industry insiders state that stablecoin issuers must clearly specify the possibility of implementing blacklist measures in the user agreement. Currently, the market capitalization of this stablecoin has surpassed the $1 billion mark.

Regarding this incident, the founder of a decentralized finance platform pointed out that law enforcement agencies may distinguish between liquidity pools and personal addresses when taking action. Liquidity pools do not belong to personal property and should theoretically not be frozen, but law enforcement may request relevant parties to freeze personal addresses, for example, once funds are transferred from the pool to a personal address, a freeze may be enacted.

This event has also sparked discussions in the industry about the centralized challenges facing decentralized finance (DeFi). Some argue that stablecoin projects of this kind inherently possess certain centralized attributes. When they are widely used in various projects, they effectively concentrate the trust of the entire ecosystem onto a centralized node. In such cases, if a single point of failure occurs, it could severely impact the entire decentralized ecosystem, leading to significant damage to numerous projects and loss of tokens.

What is even more concerning is that even if the centralized nodes are not attacked, their managing institutions still hold control over the entire ecosystem. This means they have the ability to intervene in or shut down any project that has integrated the stablecoin.

This event has sparked deep reflections on the so-called "decentralization". In some cases, the decentralization we pursue may actually be more centralized than traditional projects. This contradiction highlights the complex challenges faced in the current development of Crypto Assets and blockchain technology, and also provides important references and warnings for future development directions.