DeFi Trending Upwards on ProBit Exchange
Echoed from all corners of the crypto realm has been the sentiment that 2020 was the year of DeFi. 2021 is likely to see continued growth and interest from both institutions and users alike, as the DeFi sector has surged to a massive $33.5 B TVL and still possesses highly disruptive qualities. Sensible regulations are likely to follow, focusing on areas of compliance that will facilitate the fusing of the traditional and decentralized worlds together.
ProBit Exchange has long been a devout supporter of the DeFi space, realizing its disruptive nature and lucrative possibilities for the ProBit community. Leading DeFi tokens on ProBit have seen monumental growth these last few months and we expect nothing less in 2021.
AAVE has been making considerable strides in valuation after breaking the $500 barrier to set a new ATH at $506.81. The protocol has been a mainstay and industry leader with innovative features including flash loans and credit delegation to supplement its unmatched crypto lending and borrowing options.
Financing platform Tozex brings traders and entrepreneurs into a fully regulated and transparent ecosystem, an exciting prospect for the ProBit community. Tozex combines a token issuance module, “Tokenpad,” allowing it to launch a token-based crowdfunding campaign (ICO, STO, and BRO) with an embedded crypto asset marketplace.
Check out the DeFi tab on ProBit Exchange to see the full list of vetted tokens available for trading. Don’t miss out… 2021 may be the last year of the “early crypto adopter.”
10x Growth Possibility? Legacy Finance Crumbling
Interest rates in the US are currently at 0 percent and could possibly find negative values just like the eurozone which is at -0.50 percent. Trending macroeconomic themes such as low-interest rates and quantitative easing, being a prominent vehicle for politicians to garner support, paint a pessimistic future for traditional finance.
As long as the legacy finance system continues to crumble, users will be enticed to experiment with cryptocurrency, especially if UI develops and an ample understanding of cryptocurrency and the underlying technology is present.
Low-volatility savings rates from DeFi protocols could save small businesses during these extraordinary world circumstances, as the yields dramatically outpace that of banks. Many prospective users that could truly benefit from DeFi don’t have access to any reliable savings vehicles and are relatively exposed to the inflationary whims of the US treasury and other government-backed fiat.
Potential mechanisms of DeFi’s growth are numerous, but its capabilities for wide-spread adoption and recognition will be driven by its potential to serve as a reliable income stream for institutional adopters. 2021 will see a saturation of hybrid ‘DeFi’ models eliciting increased utility for consumer and enterprise functions. When DeFi matures and brings to fruition its promising attributes of increased accessibility in fundamental financial functions like borrowing, lending, and earning interest, it will ultimately become more desirable for corporations and drive accelerated adoption.
Regulatory Hurdles Could Influence Adoption
DeFi’s potentially “outlawed future” has been a talking point among the community since its conception. One rule at a time, it can seem that governments are attacking DeFi and what it represents, inducing a slow bleed. There have been regulatory actions and proposals by the US and EU, some of which seem out of reach for DeFi to accommodate and acclimate to.
The EU proposed the Regulation on Markets in Crypto-assets, which demands a clear organizational structure, accounting procedures, among many more specifics, from stable coin issuers. The Draft MiCA is recognized as a welcome regulation in the crypto realm as it could help remediate concerns regarding its unregulated nature and unclear legal framework. This proposal tackles negative perceptions of the crypto space while offering an investor-friendly structure. Unfortunately, not all proposals are well-founded in strong crypto comprehension and careful deliberation — some are still inchoate.
The US FinCEN division’s recently frozen proposal would have required banks and other money services to verify customer identities who operate from unhosted wallets. Although this a logical development in AML, tackling financial crime concerns, it does not bode well in the realm of privacy and could have conflicted with decentralized currency use-cases.
Luckily, newly inaugurated president Joe Biden kicked off his term with freezing of all agency rulemaking, including former Treasury Secretary Steven Mnuchin’s proposal regarding “unhosted wallets,” which was vehemently opposed by the cryptocurrency community who saw it as an impetuous move.
This proposal would have made it impossible for various projects reliant on the smart contract protocol to operate as personal information is not provided. This is only the beginning of government intervention in this space, and it seems that an acceptance of inevitable regulations is required to allow seamless fusion with its DeFi’s centralized counterparts.
We are left with a few questions regarding DeFi’s future and its potential impact on the world stage. Will DeFi be marginalized in favour of its regulated compliant counterparts? Will it become an illegal activity where it is plagued by a cat-and-mouse narrative between DeFi and the law? Or will governments see the disruptive potential of DeFi and legislate to include it?
The future is still unknown but we are hopeful that an open dialogue across major governing bodies will occur, and DeFi can begin to be appreciated for its unique value propositions, transparency benefits, financial inclusion prospects, and potentially disruptive effects on the financial world.
