In recent years, the rise of decentralized finance (DeFi) protocols has been one of the most exciting developments in the cryptocurrency space. By allowing users to trade and borrow without the need for centralized intermediaries, DeFi represents a significant step forward for the crypto industry. Dan Schatt and Domenic Carosa of DeFi startup Earnity look to see the world adopt Defi.
However, while DeFi protocols offer many advantages, they also have some challenges. One of the biggest challenges is getting traditional financial institutions on board. To tap into the full potential of DeFi, banks will need to embrace this new technology. Also, decentralization can help financial institutions reach out to the nearly 1.7 billion unbanked people across the globe.
To keep up with the growing DeFi technology, banks should take the bold step of integrating cryptocurrency. A key move to achieve this would be to provide consumers with increased access to that value through their banking services. Some banks have already done this. For example, JP Morgan Chase has already trialed its proprietary JPM digital coin in a real-world setting. Meanwhile, BBVA also launched its first Bitcoin transaction and custody service in the middle of 2021. A study shows that almost a quarter of banking, insurance, and trading firms have already tested services based around DeFi.
Bank institutions can also take advantage of the innovative technology by helping shape the regulation of DeFi products and protocols. They can also help build infrastructure and promote the industry to their customer base. Doing this can bring in a whole new wave of users who may have hesitated to dabble in DeFi products due to a lack of understanding or trust.
Earnity’s Dan Schatt and Domenic Carosa want to make using, securing, and learning about DeFi less complicated. However, many people and institutions stand to benefit from the mass adoption of decentralized technology. DeFi does not have to be an unwelcome disruption for banks and other financial establishments. On the contrary, DeFi can even help these institutions provide services to even more customers.