Not @daylon.eth, but I share their opinion (with the exception of direct eth2 staking, which I don’t think they’re referring to in this context).
To be clear, I’m assuming that “passive income” as discussed in this thread is “portfolio income” from low risk capital investment. If the risk is small enough, this income can feel like “free money”, but rest assured, there’s always some level of risk involved (up to and including the loss of the entire investment). Successful investors will accurately assess both the risks and rewards of potential investments, and then consider those investments where the risk/reward balance is favorable.
Related to defi/“yield farming”, these are the risks I see:
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Security/Hacking Risk ENS is already exposed to hacking risk, but adding Element/Yearn/Curve/Aave/Compond/Lido stacks to the mix significantly increases those risks (every line of code in this chain increases the likelihood of a “game over” bug losing the entire investment).
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3rd party Risk Purchasing yield tokens requires trust that the management teams of those tokens will always act in the best interests of token holders. The unregulated nature of crypto means there’s little or no legal accountability placed on these 3rd parties, which significantly increases risk (especially in comparison to tradfi investments).
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Systemic Risk Crypto is extremely volatile and subject to large shocks. Because the world of defi has countless interlocking parts, the entire system is subject to contagion should any single part fail. I don’t believe anyone can come close to accounting for these risks, let alone mitigate against them. Further, most defi products are very new and have never been tested by a bear market.
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Regulatory Risk Decentralized lending is a negative-sum investment vehicle which fuels highly speculative bets made by unsophisticated investors. This is illegal in most jurisdictions, and we have no idea what type of legal risk this could expose to the ENS DAO. Even if we accept that defi is largely exempt from securities law, some may find it distasteful that our gains come from other crypto users’ losses (against the “public good” mission of ENS).
Many defi products (Element included) advertise themselves as low/no risk, but in reality, they carry an obscene amount of risk and confer only average returns. That said, I applaud teams like Element for pioneering new types of financial products, and am sure their products will only get better with time.
As @Premm.eth and @Jstar mentioned, if we’re ever looking for passive portfolio income from the ENS treasury, I think eth2 staking is a much more conservative investment.