Compound Finance founder Robert Leshner says CeFi will inevitably embrace DeFi and there are signs that it is already happening.
Speak on the RESTORE TOMORROW – Global DeFi and Blockchain Virtual Summit in Bangkok, Thailand, Leshner today gave his views on CeFi / DeFi integration, the issues with Ethereum and the benefits of decentralized governance.
Host Mukaya Panich, chief venture and investment officer of event sponsors SCB 10X (linked to Siam Commercial Bank), asked Leshner about DeFi’s integration with traditional and centralized financing.
He noted that lines will blur and finance will become centralized and that companies will start using DeFi to feed the back end to improve user experiences;
“I am very excited to see CeFi systems embrace DeFi back-end operations,”
But Leshner warned that Ethereum, the network on which most DeFi projects are built, may no longer be up to the task. Leshner said Ethereum had high composability, but was slow and expensive to use, reaching its limitations. An unfortunate consequence of this, he argued, would be that it is no longer economically feasible to use for smaller transactions and users.
“The more transactions, the more small balances are displaced”
When asked about the pros and cons of decentralized governance, such as that of Compound, the licensed financial analyst identified two distinct advantages. He said it meant that no entity can mess up the protocol on purpose and anyone can contribute to the collective upgrade of a protocol.
But on the flip side, he said this leads to slower governance decisions and adjustments and the protocol may only evolve slowly over time. Compared to Bitcoin, which he said was predictable and evolved slowly, Leshner added;
“Bitcoin is so successful because it doesn’t change much – everyone knows what to expect from it,”
Leshner has revealed plans to add more “real” tokens to the Compound platform. The current criterion for recognition is that the asset must be an Ethereum-based expendable asset with a certain amount of liquidity. He stated that more will be added as they become tokenized;
“More real assets over time [will be added] as they become mainstream on the Ethereum blockchain. “
When asked about the recent DAI liquidation event, causing a number of users to lose money due to inaccurate DAI price reporting on Nov. 26, Leshner noted that Compound relies on Coinbase Pro as a “trigger for security,” and that the system worked exactly as intended. He added that one solution would be to build systems more resistant to these extreme events.