Chainlink co-founder Sergey Nazarov is convinced that 2022 will see greater institutional adoption of decentralized finance (DeFi) than in previous years. He expressed this point of view while chatting with Solana co-founder Anatoly Yakovenko during a virtual chat at the Solana Breakpoint conference in Lisbon, Portugal.
Nazarov expects that "a number of existing businesses, banks and various actors will not want to lose their relationship with key institutional customers and users." Further growth for DeFi, as it claims, will come through banks and the burgeoning non-fungible token (NFT) market.
"I expect a number of things to happen around returning DeFi through your bank, or buying NFTs through an existing market, or some existing universe of Web 2.0 tools."
Many people will start consuming cryptocurrencies via NFT Games and other free concepts.
Institutional Investors and DeFi Ecosystem
In addition, it envisages “a flow of various on-chain collateral”, which means new markets for on-chain insurance products.
"I think the world will eventually realize, probably in 2022, that there is this big market called DeFi."
Even though Nazarov believes 2022 will be the year of institutional DeFi, the industry has already made great strides this year.
According to DeFi Pulse, the industry now boasts $ 113 billion in total locked-in value (TVL), a huge increase from $ 26 billion in January. This surge, Nazarov says, can be partly attributed to PayPal. The online payment company made headlines earlier this year when it introduced a cryptocurrency trading feature on its platform.
"If PayPal has done its research and decided to allow this kind of web 2.0 interaction with cryptocurrencies, why on earth do you think your users will not come to you and will also want to interact with custody, DeFi and so on."
Ripple agrees that providing cryptocurrency trading services causes customers to want more exposure to DeFi features such as staking and yield agriculture. For this reason, the fintech company is already looking to allow financial institutions to provide such services through a newly introduced “Liquidity Hub”.
The other side of the coin
However, even with the signs of a bright future, DeFi still faces many regulatory hurdles on its path to greatness. Its stellar movement has attracted more attention from lawmakers and regulators.
Gary Gensler, president of the United States Securities and Exchange Commission (SEC), has repeatedly called for greater regulatory oversight of the industry. He claims such platforms are likely to host myriads of unregistered titles. Last month, Gensler warned that DeFi "will end badly" in the absence of adequate security protection. Investors.
But it's not just regulation that seems to plague the industry, security gaps have also been a threat, as evidenced by the million stolen hackers. bZx and Cream Finance are one of the latest victims, losing $ 55 million and $ 117 million respectively.
