USDC has frozen assets at an Ethereum address for the first time, sparking controversy over centralization risks in DeFi.

Recently, the issuance institution of the stablecoin USDC has blacklisted an Ethereum Address for the first time and frozen assets worth approximately 100,000 USD at that address. This action has sparked discussions in the industry about centralized risks.

According to reports, this decision was made at the request of law enforcement agencies. Blockchain data shows that the Address was blacklisted on June 16, 2020. Currently, the authorities have not disclosed more specific details about this blacklisting operation.

According to regulations, once an Address is blacklisted, it will no longer be able to receive USDC, and all USDC held by that Address will be frozen and cannot be transferred. The USDC issuance organization can take this measure in two cases: first, if there is a potential security risk associated with that Address or it poses a threat to the network; second, to comply with the laws and regulations of US courts or other government agencies with jurisdiction.

Industry insiders point out that the issuer of USDC must clearly state in the user agreement that blacklist measures may be taken. Currently, the market capitalization of USDC has exceeded the 1 billion USD mark.

Regarding this incident, a blockchain project founder stated that law enforcement agencies should distinguish between the fund pool and personal addresses when taking action. The fund pool does not belong to personal property and theoretically cannot be frozen, but relevant parties can request to freeze personal addresses. For example, once funds are transferred from the pool to a personal address, a freezing operation can be carried out.

This event has also sparked discussions about the centralized challenges facing decentralized finance (DeFi). Some argue that token projects like USDC, which have certain centralized attributes, effectively concentrate the trust of the entire ecosystem onto a centralized node when widely applied across various projects. This single point of control is akin to having a "God Mode" for the entire decentralized ecosystem.

In this case, if the key of the single point proxy contract is leaked, it could lead to the collapse of the entire decentralized ecosystem, causing a large number of projects to be attacked and tokens to be lost. Even without a hacker attack, this centralized single point holds the power to control the entire decentralized ecosystem, and the token management agency can use this power to intervene in or shut down any project that integrates the token.

Therefore, in the process of widespread application, USDC has effectively concentrated the risks of the entire decentralized ecosystem on its centrally controlled proxy contracts. In this case, the management entity of USDC has effectively gained the highest authority over the entire ecosystem. This inevitably raises the question of whether the decentralization we pursue is actually more centralized than traditional projects.