After the crypto winter, DeFi threatened by a merger with the traditional economy? – BeinCrypto France

DeFi has also suffered from the crypto winter. With an industry in full recovery, the future of decentralized finance would be at a crossroads more than ever.

DeFi, an injured person who draws the white flag?

With the apparent exit from the crisis enjoyed by crypto, the sector is licking its wounds and counting the companies that have disappeared. With the bankruptcy of companies such as Celsius Network, consolidation of DeFi seems more appropriate than ever. However, the task seems daunting, combining rebuilding trust and setting up a new operating model.

According Kaaran Kalantari, spokesperson for WingRiders, the reconstruction of DeFi could be jeopardized by the difficulties currently experienced by the crypto sector. In addition to a Bitcoin that somehow clings to the $20,000 threshold, the market has collapsed. Whereas it was valued at 3000 billion dollars before the winter, it has fallen by two thirds.

The first cryptocurrency, which has become a safe haven, would also expose the industry to the vagaries of the traditional market as well as inflation. This accumulation of factors could slow the recovery of DeFi. According to Kalantari, this could take several years. Meanwhile, note that DeFi could still transform by coming back stronger or assimilating to traditional finance. The latter would swallow it until it disappeared completely.

This is, at least, the bet that the American Fed seems to be making. The latter recently published a study highlighting major vulnerabilities in DeFi. The recent bankruptcies in the sector seem to have alerted the authorities. Indeed, the authors of the document insist on the need for stricter regulation. In fact, FED researchers recommend the integration of traditional finance within DeFi. This could then pose a framework similar to that of the current markets. Otherwise, the authorities could find it very difficult to regulate the industry if it became powerful enough to compete with the banks.

Could it be the best asset in the sector?

However, despite the many vulnerabilities it still seems to have, DeFi could become the trigger for the crypto explosion. According to Kaaran Kalantari, current geopolitical events such as war and inflation could turn to the advantage of the sector. As Ukraine relies on cryptocurrency donations and non-fungible tokens, the industry seems to have become a safe haven of choice in times of crisis. A situation that would be an opportunity for DeFi to win.

With its fast transfers and open to everyone, DeFi could surpass the traditional system and allow access to finance to unbanked regions. For Kalantari, it could even democratize a system of loans and borrowings. As for investments, savings and various returns, they would also be more accessible to the public.

However, a regulation worthy of the name remains necessary to avoid abuses. Time will tell us if DeFi will have merged with traditional finance or if the latter will have imposed itself in the eyes of a population tired of economic crises.

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After the crypto winter, DeFi threatened by a merger with the traditional economy? – BeinCrypto France


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