We continue to cover panels held at the most important crypto event in Latin America. This time it is up to us to talk about the panel conducted by Lander Rubio, where the risks and opportunities that exist in the famous decentralized finance, better known as DeFi, were discussed.
What are DeFi?
To start, the speaker gave us a short introduction to the topic, talking about what is perceived as the DeFi environment, a colorful and creative ecosystem that is in contrast to the limiting financial system we are used to.
DeFi comes from the words Decentralized Finance, a name that is intended to describe an environment where financial intermediaries are eliminated, by replacing them with smart contracts.
Are they really decentralized?
Continuing with the panel, Rubio shared a relevant point of view about the debate on the true decentralized nature of DeFi. Debate that begins to delve into the risks of this new technology.
To talk about this, Lander thinks that it is necessary to talk about degrees of decentralization, as happens with public blockchains. In DeFi we can measure decentralization, depending on who owns the smart contracts or who governs the DAO.
He adds that the decentralization of decentralized finance will be put to the test as regulations are imposed on the ecosystem.
Going further, the speaker delves into the risks of DeFi starting with the basics. He spoke that one should begin to assess the hazards from an analysis of the layer where these projects are mounted.
Currently most of the DeFi are developed on Ethereum, and remembering that this blockchain is still a project in development, it continues to be susceptible to errors.
Another important aspect that Lander highlighted is related to the problems that smart contracts can present, bugs that can appear even after they successfully pass audits.
To finish with the risks section, the speaker talked about the derivatives that exist in the DeFi ecosystem. These are used to maximize profits, but in turn increase risk by the same magnitude.
In general, Rubio assures that most of the risks are temporary. Think that they will decrease as adoption increases and time continues to bring new developments.
Regarding the opportunities section, the speaker indicated that one of the ones that stands out the most are the attractive interest rates offered in this ecosystem. Meanwhile, the returns that banks give to those who save are getting lower.
The 24/7 availability of DeFi is another of the advantages that stands out of this technology. In contrast to a traditional system where you continue to work by hours.
To finish with the opportunities, Rubio highlights the possibility of carrying out operations through Decentralized Finance without the need to carry out any KYC, a process through which a person’s identity is verified.