The rise of platforms such as BlockFi and Celcius, to name a few, are proving to be lucrative game changers in a space where traditional bank loans are still prevalent. I feel that big banks and governments will not let it grow to a point where their bottom line will be threatened. Therefore, can DeFi platforms survive long term or will new and possibly inevitable regulations / laws hurt their growth?
Technically those 2 you mentioned, including NEXO, are considered as CeFi given they hold the funds in custody (see Delphi Digital reports about this) but I like them regardless as they strike the right balance between being a crypto platform and ease of onboarding for newbies. To answer your question I think the the recent vulnerabilities highlighted by MKR show that there’s a long way for DeFi to go mainstream, and RSR have previously touched on MKR’s scalability issues. That and Joe Lubin also mentioned that core infrastructure in the decentralized Identity, Credit & Insurance spaces need to be fully developed in order to enable DeFi growth. NXM have made strides in the insurance space after the MKR issues, that’s definitely one to watchout for.
Hey, thanks for the reply. I agree we still have a long way to go. I was not aware of the differences in DeFi and CeFi, thanks. I read a good article about them on Medium, in case anyone is interested:
Gonna keep researching this whole field as I find it very interesting. Hopefully in the future we can have a lending platform that combines many of the best attributes from the ones available now. I felt decentralized would be preferable since we’ll be able to truly become our own banks.
Hello, I think yes they can survive long term. There are many factors which will influence how DeFi functions, and ultimately people worldwide will have to find a way to make it work in our best interest. I think decentralised cryptos like BTC, ETH etc are a global need. Technology is sometimes responsible for making existing businesses or industries redundant.
That’s a really good article, thanks for sharing. Yeah I think there are a few trying to do that with the lending platforms now, KAVA is one of them.
If I envision next 5 years DEFI would gain more maturity. Now DEFI is still in infant stages, Once it grows it might not over power banks but still have its own space. It takes loooooong time for adoption, Once again early adopters will always make more profits
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I dont think De-Fi will have any issues with regulations. Its the centralized players that will cause trouble for crypto. I’ve actually looked into a more defi action plan. Find ways to move your money through defi and stay away from anything centralized or that has taken your identity (e.g. drivers license, address).
DEFI will be the future. Countries like Africa, Rwanda, Ethiopia, Zimbabwe… needs DEFI badly.
There are other countries where people have to stay in queues just to get their own money. This is what banks and doing Monopoly, this should go. Defi is a great way to get the loan or lending your tokens to get interest. DEFI does all the banking services without any third party. I agree with for below quote @crypto2
Advocates say DeFi has the potential to transform the lives of the world’s unbanked — and make life more affordable for everyone else.
Let’s take a look at the remittances market, in which foreign workers send billions of dollars across borders to their loved ones back home every year. The fees they face for doing this are often extortionate — eating into their modest income. DeFi services have the potential to slash these costs by more than 50%. Not only does this offer an incentive for an employee to earn more and be more productive, but it will also help support small businesses and economies on the other side of the world.
Loans are another pain point that can be addressed thanks to DeFi. Right now, it can be near impossible for the unbanked to borrow money, often because they lack credit records and history with a banking institution. DeFi platforms connect borrowers and lenders directly, eliminate credit checks, and enable digital assets to be collateralized.
Other forms of decentralized finance include stable coins, a type of digital currency that shields consumers against the volatility of crypto by being pegged to another asset such as dollars or gold. Tokenization means real-world assets such as art, property and commodities can be owned and traded on blockchain, while decentralized exchanges mean users hold on to their funds at all times — reducing the risk of cyberattacks, a scourge that many centralized platforms have been struggling to shake off.
Thanks, Srikanth ! you are article very really helpful
I believe that Defi will survive and be a driving force in the future of crypto. Since almost every major country (USA, China, India) is making a digital currency. CeFi is laying the groundwork for where DeFi will be in hopefully 5 years. People desire independence from banks or better services (and higher interest rates) from them.