Will DeFi replace banks? Some industry insiders seem to think so. Or at least they predict the two will come together in a way where DeFi and regulated banks will work collectively.
Forbes recently published an article that highlighted how DeFi is poised to disrupt traditional banking. Already we are seeing the DeFi market expand exponentially, in part by attracting tech-savvy investors and in part by offering yields simply not possible with other types of conventional financial assets.
And while some investors are still wary of cryptocurrencies and DeFi, companies like DeFi Technologies Inc. (NEO: DEFI) are bringing legitimacy and transparency into the decentralized finance market. DeFi Governance could well be the catalyst DeFi needs to one day replace centralized banking.
How game-changing is DeFi to centralized finance? In a recent Forbes article entitled “Software Hasn’t Eaten Wall Street Yet. But Ethereum And DeFi Might Be About To” contributor Billy Bramborugh puts DeFi and its impact on Wall Street into perspective:
[DeFi] Software is now coming for Wall Street in the same way Facebook’s News Feed came for traditional publishers with the rise of blockchain-based decentralized finance (DeFi), designed to replace the role of banks with blockchain-based protocols—and at a time when macroeconomic conditions have left banks vulnerable.What was once an investment niche enabling crypto assets to mimic traditional financial instruments like loans and interest, DeFi has grown from $700 million to a $40 billion market in less than a year. The explosive growth has attracted the attention of even the most well-known Wall Street veterans. During an interview with Fox News, president of Bianco Research and Bloomberg columnist Jim Bianco, stated “DeFi could disrupt the current financial system the way ride-sharing companies disrupted taxi companies, or the internet disrupted newspapers, or e-commerce disrupted retailing.”
DeFi’s skyrocketing growth in 2020. Source: Defipulse.com
US-Accredited Investors – those with a net worth exceeding $1 million or annual income above $200,000 – are jumping on board with DeFi at an unprecedented rate. A recent Xangle survey of accredited investors found that 67% of respondents had some knowledge of DeFi. Over 72% of those surveyed said they intend to invest in DeFi within the next 12 months, while 70% responded that they have already invested in cryptocurrency.
Overall, the survey found that accredited investors were far more likely to be investing in DeFi in the near term than not. However, despite the enthusiasm, an overwhelming majority – 78% to be exact – also indicated that they believe some form of DeFi governance and regulation is required to protect investors.
Seemingly ahead of the curve, DeFi Technologies Inc has recently announced the upcoming launch of a new security protocol that will address the current lack of governance in the DeFi market. The protocol, aptly called DeFi Governance, will work with existing decentralized networks running nodes to provide governance and validate transactions globally.
In a partnership with Shyft Network, a leading public blockchain protocol designed to provide security and transparency by acting as a bridge between user data and data ecosystems, DeFi Technologies Inc will implement node servers for their KYC decentralized network.
Shyft Network is the first network to build a crypto KYC identity layer for decentralized finance, giving participants and transacting institutions the security of identifying both sides of an otherwise anonymous transaction immediately. As part of this partnership, DeFi Technologies aims to become an early innovator in globally-distributed governance. For running one of the consensus nodes, DeFi Technologies is entitled to receive rewards in return for securing transactions and providing governance services on the Shyft Network.
When commenting on the potential implications of DeFi Governance, DeFi Technologies advisor and founder of Snowflake EMEA Thibaut Ceyrolle remarked that “At Snowflake, I have seen how to build a new business from the ground up. DeFi Governance has the potential to become a product the entire DeFi market will need as part of the burgeoning global DeFi network and infrastructure. I’m excited to help and advise the team.”
Disclaimer: The company described in this article is a customer of NAI Interactive Ltd. This material is for informational purposes only and is not intended as a recommendation or offer or solicitation for the purchase or sale of any securities or financial instruments, or for transactions involving any financial instrument or trading strategy.
