Banks & Exchanges Know DeFi Is the Future


The important role in which the development of the technological topography that surrounds most of today’s popular cryptocurrencies is something that is being taken very seriously by even the most long established institutions and traditional venues.

A few years ago, when the major banks and management consultancies began investing billions of dollars into the development of cryptocurrency, it was quite obvious that what they actually wanted was not to be able to mine an outlying, peer-to-peer, community-driven disruptive digital asset; what they really wanted was their own version of the blockchain technology upon which it is built, largely so that they could use distributed ledger-based solutions to conduct their own internal operations such as back office and reporting in the case of banks, and in to get maximum efficiency on outsourcing projects for the big consultancies.

Those were pioneering days, and only some instances of blockchain based solutions have been implemented by the banks, but now a whole new dimension is very much in the line of sight of the mainstream exchanges of Wall Street: DeFi.

DeFi, which is an acronym for Decentralized Finance, is the entire topography and structure of cryptocurrency, not just the blockchain ledger, and according to NASDAQ, one of the world’s most well respected listing venues for publicly traded companies, is ‘ready to disrupt the future of FinTech’.

NASDAQ’s commentators today made their stance clear, with a guest perspective from Chainlink’s Adelyn Zhou today stating that over the last year, a “decentralized Wall Street” has emerged, with users locking up over $50 billion worth of assets into applications that are replicating traditional financial products on decentralized blockchain infrastructure.

The experts’ take on the immediate future is that a whole new generation of financial markets participants are using DeFi for all areas of their investing, trading, lending, saving and borrowing requirements, all without the permission of companies whose interests may not always align with their customers.

In fact, many business funding startups in Europe and the US today are providing business loans via FinTech-orientated crowdfunders, all via DeFi solutions.

The inside viewpoing this week went even one step further, stating that it is only a matter of time before DeFi genuinely disrupts the legacy banking sector.

The advocacy of DeFi is absolutely clear, as large institutions begin to concur that any skepticism around DeFi has come about as a result of large scale misunderstanding of how attractive this technology is to members of the general public. NASDAQ believes that many fintechs are now aware that they can outmaneuver banks by offering better user experiences and giving users increased control over their finances.

Becoming ‘DeFi ready’ is clearly on the agenda, even within large organizations such as Wall Street’s stock exchanges, and on that score, NASDAQ’s publication by Ms Zhou encourages FinTechs to look closely at which popular apps people are using to borrow money, and at the behavior of people who are comfortable controlling their own wallets and interacting directly with smart contracts.

It has even been suggested by some analysts in the US that during the volatility within the cryptocurrency markets over the past few weeks, central banks have been given a chance to begin to control the DeFi world as the current line of thinking is that crashes like the one in May could have severe long term consequences even for those unfazed by such events.

That was just a noise, however, and no banks actually managed to rein in the growing need to adapt to a world in which DeFi is very much part of today’s financial markets structure and will be even more part of tomorrow’s.

Whales thrive in during times of volatility, and the figures surrounding how much cryptocurrency the whales retain at times of peaks and lows is telling.

The future is definitely now, and even the most reluctant old school institutions have no choice other than to be on board.