The founder of defi-related fintech Yield believes that 2021 will be the year when decentralized financing (defi) becomes a ‘common term’ in the financial sector, as the sector now takes it seriously and builds R&D labs.
The financial sector is now taking the defi seriously, says expert
During an interview with news.Bitcoin.com, Tim Frost, who also worked on the development and growth in early stages of crypto companies like QTUM, NEO, Paxful and Polymath, among others, predicted that the total locked-in value will exceed $ 100 billion in the defi industry in the next 12 months. He added:
In 2021, the fi will go through some cycles, but clear winners and value propositions will become clear and clear.
Defi platforms such as Yield, which recently raised $ 3.4 million in funding from BnkToTheFuture, Alphabit Fund, among initial donors in a hybrid round, have drawn the attention of other companies to provide initial funding.
The founding member of the digital banking platform, Wirex, said there will always be speculation and inevitable inefficiencies, as with any new innovation in the financial market. He believes these are more present in the context of cryptocurrencies and the peer-to-peer (P2P) nature of defi.
However, he continued to explain why investors are interested in defi:
For some investors these are risks they are unwilling to take. However, it can be assumed that the “ risk-adjusted return, ” the trade-off between risk and expected return or the risk premium that an investor requires to invest in defi-instruments, will of course be set against other mature income-generating financial instruments. We see this today through the excessive returns (> 1,000% APY) that can be achieved using complex liquidity mining strategies and re-mortgaging techniques.
On yield farming, Frost said it has “ opened the eyes to many, ” as it has drawn a lot of attention to defi, “ and while much of the current form we know as yield farming won’t last long, the basic concept of providing of liquidity and receiving returns for this is very sustainable and forms the basic principles of yield farming. “
Security in the Defi industry
The defi industry also made headlines in 2020 for the security breach incidents during the year. Frost noted whether it represents a major weakness of defi today, as he pointed out that people are often “too rush” on these types of topics:
To deploy a financial business safely, you must perform a full technical and business due diligence. Many defi projects simply do not undergo extensive analysis and control before going live. Without the right procedures, the vulnerabilities are great and not safe to use capital. The defense industry must mature and introduce better procedures.
According to research executed Crypto exchange Crypto.com, surveying 29,574 of its users, mainly on NFT, 74% of respondents admitted to using Defi products.
Do you agree with Tim Frost’s view of the fi industry? Let us know in the comments below.
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