BeinCrypto had the opportunity to attend one of the many talks held at the Canadian Futurist Conference. Various influencers from the decentralized sector discussed how Decentralized Finance (DeFi) could disrupt or compete with traditional finance.
Aside from areas of improvement for increased adoption by the public, all speakers agreed on the promising future of the sector. The online conference took place between November 11 and 12.
Exponential Growth for the Decentralized Sector
Recently, the term has expanded to include a host of decentralized financial services, such as derivatives or AMM (Automatic Market Marker). Unlike the traditional, centralized financial system, these DeFi services have the particular advantage of being “permissionless” and do not require a middleman.
Recently, DeFi has experienced “exponential growth,” as Brian Norton pointed out. Its TVL has increased from $1 billion in February to over $13 billion in the last few days.
“Sustainability, Trust and Simplicity”
According to Yonathan Lapchik, CEO of SUKU and another participant in the chat, decentralized finance could potentially disrupt or even replace certain parts of traditional finance, based on three main elements:
- Those with the least value to the consumer,
- Those with the most friction with users, and
- Those that are the most difficult to access.
For example, he mentioned consumers with smaller funds who cannot benefit from certain loans or investment services.
That being said, to compete with centralized finance, and more importantly, to find its place among a larger number of users, Lapchik believes that DeFi must also focus on improving three crucial features.
First, according to him, decentralized finance should be a viable and sustainable sector in terms of its strategy. He notably cited the bubble effect and the huge influx of funds headed towards DeFi protocols before investors finally returned to safe havens such as Bitcoin.
Mr. Lapchik believes that these “experiments are fascinating” but that they “are not viable,” adding :
“We need to find our real users.”
Secondly, he mentioned the importance of “trust in the code” before admitting, as did other speakers at the conference, that the DeFi environment and its tools are still “too difficult” to use and too complex from a technological point of view to be attractive to a wider audience.
DeFi: An Experiment With Potential for Adoption?
Referring to the recent KuCoin hack, Brian Norton also agreed that DeFi is still an “experiment,” recalling :
“Will you put your life savings in the hands of a company you barely know? […] Do your research.”
That said, despite the youth and the still-experimental aspect of this sector, many think that DeFi has all it takes to become an increasingly valid alternative to traditional finance.
Greg Keough, the founder of the DMM Foundation and a speaker at the talk, said that the sector’s attractive yield could make it a new and complementary investment solution for retailers and institutions.
Finally, all speakers agreed that by 2021, DeFi could continue to grow exponentially, perhaps reaching “hundreds of billions of dollars” in TVL.