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DeFi Explosion Could Result In Paradigm Shift In The Financial Industry

Decentralized finance (DeFi)’s popularity has been skyrocketing all 2020 amidst the global crisis, and now it continues on the same path.

DeFi is a term that encompasses a massive push to automate and remove middlemen from traditional financial services such as trading, borrowing and lending, derivatives, and insurance.

Not too long ago, it’s been revealed that Jesse Powell, chief executive of crypto exchange Kraken, said that the firm has been witnessing a significant uptick in the number of new users as interest in cryptos grows.

“Quite a lot, actually. And people that started trading with cryptocurrencies first are shocked to find out how the equities markets actually work, with so many middlemen in the process, not actually owning your stocks, having someone else technically own them, having someone else custody them, not being able to move them wherever you want instantly,” he said as cited by the Daily Hodl. 

DeFi could trigger a paradigm shift in the financial scenery

The same online publication mentioned above notes that the St. Louis Federal Reserve, which is one of the 12 regional banks of the US central banking system, has published a new report that analyzes the potential of DeFi.

They bring up Fabian Schär, a professor at the University of Basel who specializes in DLT and fintech.

He wrote in a paper that while DeFi is still a niche and small market, the industry is growing fast.

He talked about the nascent industry’s rapid growth and shared a chart that reflects the rise of DeFi-locked USD and Ether (ETH) assets from 2018 to 2021.

Check out the chart below as well.

“The spectacular growth of these assets alongside some truly innovative protocols suggests that DeFi may become relevant in a much broader context and has sparked interest among policymakers, researchers, and financial institutions,” he said.

The same report says the DeFi ecosystem can boost the efficiency, transparency, and accessibility of the financial infrastructure – more than that, it can also create unique new services.

We suggest that you check out the complete paper in order to learn all the available details.

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