In recent weeks the main crypto and financial media in general, have made much of their headlines with DeFi. Today, experts from the region give us their vision on the present and future of decentralized finance.
The DeFi (Decentralized Finance) were born with the objective of granting loans through Blockchain technology, through smart contracts.
At the time of writing, CoinMarketCap, has listed over 80 DeFi projects. The most important is Chainlink, with a market capitalization of just over $ 4 billion.
Experts give their opinion on DeFi
At the international level, Vitalik Buterin has ruled that he will wait as DeFi develops in the medium term, before entering this sector. For his part, Scott Melker, said that DeFi returns to users the capabilities lost compared to traditional banking.
Now then, we are going to explain what Latin American experts think about the present and future of DeFi.
Andres Salamone (Founder Córdoba Bitcoin)
The DeFi are in a technology race and improving their networks. Currently the gas for your transactions in which they are based on ETH exceeds 12 USD due to the saturation of the network. That is why we will see a massive migration to other PoS-based protocols that improves their speed and costs in transactions.
The DeFi, despite not being decentralized and not exempt from censorship like Bitcoin, are an alternative in countries like Argentina or Venezuela that are complicated with restrictions on the dollar exchange, or the devaluation of the country’s currency.
Santiago Guzman (CEO of CriptoLatinFest)
We are in one of the most challenging years in the world due to the Coronavirus pandemic. And in this time, people have been given the opportunity to learn about new investment options, with the aim of being able to cushion the financial deficit. Thus, opportunities such as DeFi (decentralized finance) arrive and become an investment opportunity. However CAUTION not all that glitters is gold.
We could be a trend very similar to 2017 with ICOs, which lent themselves to scams with useless projects, most of which did not work and very few were successful. The same thing can happen with the DeFi fever, do your research, analyze before investing your money.
Alexander Sewrjugin (Founder of the PHI Economy Movement)
The DeFi are innovating and cutting edge in many aspects of the economy and finance, and they are already a concrete present to explore new forms and economic-financial processes. And although in the short term we can see models that pursue only speculative purposes; In the medium and long term, they will allow us to learn and create new mechanisms that help to seek that sustainability and inclusion that our global society needs so much to achieve.
And it is in this sense that I find it very interesting to observe the “simile” of money creation -token and / or crypto creation processes- as what happens with the M1, M2 and M3 of the monetary system in countries -coins fiduciaries-. Something that was previously only reserved for Banks, today is also expanding and can be done in a P2P format, and on a “global” scale.
Finally, it seems fundamental to me, and what the DeFi is promoting, is the possibility of removing friction between tokens and enabling great liquidity between them.
This allows the formation of stable cryptocurrencies -when created as a backup for others-, through collateralization with different assets or a basket of assets -including fiat currencies-, and even values that until recently we considered intangible, not susceptible of being monetized – or to function as a security for the circulation of a token, and with the potential to become a currency in the future.
Definitely the DeFi in the last few weeks has caused quite a stir, but personally I see a lot of speculation in the market. Some cryptocurrencies were unknown to anyone a few weeks ago, and now they have an amazing market capitalization.
I think you have to be very cautious when investing in DeFi, as a possible bubble may be just around the corner.
However, taking speculation out of the way, the concept of decentralized finance is very interesting. Through DeFi you can obtain loans instantly, and best of all automated with a smart contract, without the need for human intervention. Will banks like this? I do not think so.
Finally, what is at stake here is not how much a Token is going to be worth tomorrow, but how to move the money in the next generations.