What the Future Holds for DeFi
The increasing popularity of decentralized Finance — or DeFi — has been widely touted as the death knell for traditional Finance or TradFi. While we’re not quite there yet, there is a good reason why DeFi has captured the popular imagination: the total value locked in DeFi protocols has surpassed $100B.
The market value of Ethereum-based DeFi transactions is proof enough that it is giving TradFi a run for its money. In addition, DeFi may soon be the preferred choice for institutions to fulfil their credit needs due to its ability to provide financing at more competitive rates when compared with TradFi.
What is Defi-Decentralized Finance?
Decentralized Finance (DeFi) is a financial system that operates on a network of computers rather than a single server. DeFi is a new digital financial infrastructure that eliminates the need for a central bank or government agency to authorize financial transactions.
DeFi is inextricably linked with blockchain, the Decentralized, immutable public ledger on which Bitcoin is based, which allows all computers (or nodes) on a network to keep a copy of the transaction history.
The concept is that no single entity has control over or can alter the transaction ledger.
DeFi-The Future of Finance
The introduction of money significantly improved efficiency. However, with DeFi, anything may be tokenized, including goods, services, art, and music, to name a few examples.
Thus, you can choose how to pay in the future. You may pay for groceries with a gold-backed token; you could use one backed by IBM stock. It is all up to you. If your selection does not match what the retailer desires, a Decentralized exchange effortlessly converts your asset into what the store wants.
It is barter, but it is a valuable barter. Central banks face competition in today’s world. They lose their monopoly over money.
Co-Founder and CTO of Unstoppable Finance, Peter Grosskopf, said.
We, humans, have a natural desire to travel through time and a fascination with future predictions.
Let’s see how DeFi will be in the future.
a). Increase in DeFi Tokens
There are currently more than 100 DeFi Tokens in circulation. Popular cryptocurrency exchanges such as Binance, Okex, and Huobi have already listed DeFi tokens on their platforms. In the future, we can expect many new DeFi tokens, and many cryptocurrency exchanges will undoubtedly list them.
b). Crypto Lending Would Become Extremely Simple
Crypto Lending is DeFi’s most popular application. In the future, DeFi will bring a secure ecosystem for super-simple asset-based crypto lending that will be faster and simpler than the current one.
c). DeFi Based Payment Gateways
Payment gateways based on DeFi provide lightning-fast transactions in seconds without charging a single penny as a cross-border transaction fee. Many popular e-commerce sites would include payment gateways like this on their websites.
d). DeFi in Banking
Many countries are preparing to launch Central Bank Digital Currencies to participate in the digital revolution, including the banking sector. It will come as no surprise if banks adopt Decentralized Finance.
Decentralized Finance is gearing up now, and if it provides user-friendly and high-security features, it will do wonders in the future.
Conclusion
The financial services industry is witnessing significant disruption due to technological advancements such as blockchain and distributed ledgers.
What is certain is that DeFi is here to stay, Web3 is looming, and financial services will never be the same again.
Consumers should be able to use DeFi capabilities through the banking and insurance services provided by all financial institutions. Otherwise, they will be left in the dust by DeFi platforms and rivals who recognize the future, which combines ease of use and convenience with the power of Decentralized financing.
