Mariano Di Pietrantonio is head of strategy makergrowthis a major unit of MakerDAOlending platform that manages Midwife stable currency.
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This crypto winter needs no introduction. Completely engaged with the many ideas within crypto Sam Bankman Fried, the one time face of the industry who is now sitting in a jail cell. Collectively, the crypto space is questioning what we believe to be true about our industry, whether we can truly judge a success story, and how to prevent it from happening again.
The effect of recent events on crypto’s sentiment has been dire, and made worse by the fact that it follows a period of low highs, in which novice retail investors were empowered to get involved in the burgeoning crypto sector. Now, skepticism is affecting even the most prestigious centralized crypto projects. Companies that have never been suspected before must be shown ‘Proof of Store’ and radically increase their transparency in order to survive.
The crypto finance space is currently far from winning the trust of the public. While good ideas and intentions exist, there is little guarantee that they will not be corrupted and exploited.
Keeping this in mind, praised DeFi (decentralized finance) is expected to be received over a few quarters. Removing the centralized component of crypto finance and providing trustlessness instead Decentralisation There is an understandable appeal in the protocols and codes, the system of community voting, and the inherent transparency in decision making and assets under management.
While the centralized crypto world has been talking about ‘auditing’, although the concept is new, DeFi has been humbly putting such ideals into practice for nearly a decade.
Away from the hype, celebrity endorsements and hero worship of last year, DeFi is quietly building a better financial world – and will continue to build it through times to come.
DeFi’s Ongoing Appeal
Despite having our own bulls and bears – for example, the DeFi summer of 2020 and the apparent DeFi winter of 2022 – the tangible capabilities of DeFi have continued to grow. mainstream financial institutions and large enterprises, such as Tesla, monatelisAnd Huntingdon Valley Bank, DeFi has been adopted for real-world problem-solving. Through the peak of 2022, MakerDAOIts decentralized community quietly manages a portfolio of over $7 billion in AUM (assets under management), increasing and decreasing this number in sustainable, sensible responses to market events.
The removal of centralized intermediaries from the financial process is something that those of us in DeFi knew would be the most important factor to watch over the long term. Fundamentally, the value of crypto is derived from the immutability of the blockchain as a database. Decentralization, transparency and community action are inherent parts of this world.
Flat Regulation, which certainly has its place in the future of finance, cannot replace the requirement of good faith enshrined in the Code. Regulation alone cannot ensure the absence of corruption; A fact that is true outside of crypto as well. We can see examples of corrupt corporate entities hiding secrets from regulators as proof of this — enron And theranos immediately come to mind. It’s also worth remembering that like the leadership of Enron, ftxCampaigned for more regulation in his sector.
While regulation provides a means to hold guilty parties accountable, it does not always deter bad actors. That goal requires decentralization from the start.
DeFi Provides Necessary Liquidity
One important fact, understood by those in DeFi, is that it is wrong to use market capitalization as an indicator of the value of a company or token. The last bull cycle relied on market capitalization to judge the apparently booming health of some cryptos exchanges and other centralized institutions.
But, like Googling the net worth of a public figure, it can be confusing. What matters is not the total net worth or market cap, but the liquidity of the asset.
DeFi protocols can be used to provide liquidity to the rest of the market, further proving their integral contribution. MakerDAO provides liquidity for lending and borrowing in crypto, while other DeFi protocols provide liquidity pools so users can lock crypto assets into smart contracts, providing liquidity for decentralized exchanges (dex, A more liquid market is associated with less risk, which means a safer environment for users.
on a mission to make
Looking ahead to 2023, the DeFi space will build on this value by improving service offerings. So far, CeFi has been an easy access point for newcomers to crypto, thanks to its easy-to-use apps, fun incentives, brand endorsements, and reliance on centralized teams to take care of the details. DeFi requires more research on the part of its users, especially in a dao (decentralized autonomous organization) where token holders vote on the direction of a project. The fact that due diligence, reporting and decision-making are not absorbed by a centralized entity naturally makes DeFi services more complex.
By improving the UX (user experience) and UI (user interface) of many DeFi functions, we will open up the future of finance to new audiences and achieve the universal goal of financial inclusion.
Furthermore, the path to full decentralization remains unfinished for many projects. This year’s events have provided new momentum in our industry for more projects to open up community voting and record transactions and decisions on-chain.
Many projects will have a roadmap for decentralization in 2023, as DeFi developers are already busy making these plans a reality.
This radical movement towards transparency, accountability and community action will advance the DeFi agenda and ultimately help us leave centralized corruption a thing of the past. Right now, the developers at the center of this movement are determined to further increase their valuable output. Rather than allowing the crypto space to play to the whims of bystanders and the actions of a few corrupt people, following DeFi’s lead will ensure that we emerge as winners from the bear market in the long term.
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learn more:
, New report shows traditional finance outperforms under market conditions
, Seeing the untapped potential of DeFi
, What DeFi Offers Beyond Lending for Crypto Speculation
, Top 7 Decentralized Derivatives Trading Platforms
, Going From Crypto Winter to Winter Spring: Lessons from the Bear Market and When Winter Will End
, Incorporating the Pros and Cons of Web2 into Web3
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