By Alicia Maher
When a top-level executive from Safaricom told some MBA students of MIT four years ago that DeFi will soon allow all the processes involved in purchasing a house to be completed through a smartphone, none of them believed him. Heck, most of them felt it was almost impossible. At that time, the Bitcoin price was still below $19K. Hence, they couldn’t believe what the executive was saying.
Even though that discussion is four years old, most people and businesses are yet to grasp the positive effect of DeFi in our world. A DeFi future is now a possibility more than ever, with its total value locked now more than $155m.
In this DeFi future, there would be no need for 3rd party financial systems as every financial transaction will be completed under a decentralized system. DeFi protocols will further enhance the wider adoption of blockchain and FinTech innovations. The good news is that DeFi’s current liquidity is more than enough for it to become mainstream and attract more tangible assets.
The team behind these DeFi protocols needs to switch from customer attraction to customer-centric development quickly. Thus, when a similar conversation like that of four years ago happens again today, people will no longer imagine it as an impossibility but a normal part of everyday life.
Revolutionizing Data Movement, Control, And Custody
Oracles will play a crucial role in ensuring the movement, custody, and control of data such that there will be no need for any centralized financial system such as banks. Oracles will link the actual data with smart contracts. However, there is still a need for a crowd-sourced DeFi solution for data analytical tools for the finance world.
Yet, the real concern is, what will be the structure of governing this unique non-centralized community? The answer to this question will also help the social media space as it has smeared its credibility for many years now.
A DeFi For A CeFi
Currently, Alipay (China’s virtual wallet payment system) is close to the model of how a DeFi system will replace the current centralized finance (CeFi) system. Alipay has made it possible for its users to perform various financial transactions, including bill payments and investment purchases. It is an excellent example of how people can lead their everyday life without current stress.
But there should be DeFi projects for cryptography on various services as it is currently obtainable. Once that is in place, there’s a need for a DeFi project to transfer and scale actual assets into this non-centralized space.
The best option would be a zero-friction lending protocol that will enable lending transactions via fiat. Thus, removing the need for a crypto education. Also, there should be a yield strategy for tangible assets for lenders, especially CeFi lenders, to be exposed to digital assets.
Through a tangible asset lending system, DeFi projects can duplicate almost all CeFi features. Also, the ecosystem’s growth will be quicker since there will be more DeFi projects for this asset category.