If participating in DeFi doesn’t make you feel like standing at the gates of disruption, just waiting for someone to turn around the key, you’re likely doing it wrong.
To contextualize the changes in DeFi over the last year, it is essential to recap that, just one year ago, in April of 2020, the now $51 Billion of value locked in DeFi protocols reached an All-Time-High of a “mere” 700 million. Because of this, it should be no surprise that, according to a recent survey, as many as 72% of US and 60% of UK’s accredited investors aim to utilize DeFi over the coming year.
Changing times, booming industries
Value locked isn’t the only thing that has changed in DeFi. Thanks to the growing interest in these protocols, the supply of stablecoins in the crypto market has grown beyond $26 billion, Polkadot’s network has witnessed a 44% increase in developer activity, and the traffic of Ethereum’s network has grown to critical heights, soaring beyond the imaginable.
According to EQIFi’s Chairman, Jason Blick, the way institutions and governments think about these instruments has also changed. Jason tells us:
“Bank of America analyst Francisco Blanch recently claimed that “DeFi is the most fundamental challenge to modern finance that we’ve encountered. He’s 100% right.”
Is DeFi ready to meet 70% of all American investors?
Jason, and many others, know the data well enough to be excited about 2021 becoming just as big as 2020 in History books. As Chairman of a fully-regulated bank that offers access to cryptocurrencies and DeFi instruments to high-net-worth individuals and companies (two sectors left behind by mainstream crypto adoption), he exhibits a calming certainty. Jason also thinks that those not following EQIFi’s example of providing customers with regulated access to DeFi will suffer in the future.
As he says, “The future of finance, especially for traditional centralized institutions, will be determined by how they deal with the challenge of DeFi. They can choose to embrace it, modernize their systems and the fundamentals of how they run their business, or they can fall by the wayside. It’s as simple as that.”
Indeed, the stars seem to be aligned for DeFi’s second great wave to take the world by storm. Almost in agreement, crypto users (and those waiting on the sidelines) seem to wait for the final piece of the puzzle to roll up the curtains.
Ethereum 2.0: The great disruptor
Despite the recent interest in alternative chains, Ethereum continues to be the network of choice of DeFi protocols. There, however, has been controversy on the increasing congestion of the ETH network, as we mentioned above. In fact, this excess traffic has caused transaction costs to rise to near-three-figure sums, making DeFi too costly to operate for average retail investors.
Ethereum’s founder, Vitalik Buterin, has recently commented on the complex changes that the Ethereum Foundation aims to implement to increase significantly the number of transactions that ETH can process without affecting its security. He also expressed his interest in keeping the chain decentralized. Since Ethereum aims to scale to become a “worldwide, decentralized supercomputer”, these changes are critical for the network to withstand the subsequent computational requirements.
However, the good news is that, after a criticized waiting period, Ethereum 2.0 is now on track to debut in the near future. If 70% of America’s accredited investors and 60% of those in the UK are looking to get into DeFi (either directly, through a bank, or a crypto exchange), they’ll be met by growing innovation, more efficient chains, and, maybe, a smiling “I told you so” from the crypto community.
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