The Importance of Developing the Decentralized Finance Space
This Is The Future Of Finance
AUG 16, 2020
Developing the DeFi space is perhaps the most important task that lies ahead for the crypto community in the coming years.
The rapid growth of the decentralized finance space, the rise in demand, the improvement of its protocols, and the breadth of offered services and opportunities will provide retail users with the options they are sorely lacking in the existing financial system. And it will enable institutions to move real-world assets onto the blockchain, generating untold cost-savings and improved efficiencies.
But it doesn’t have to be a violent revolution. DeFi doesn’t necessarily need to overthrow the incumbent system. I believe that DeFi will complement traditional finance, force it to do better, and, more importantly, allow for financial inclusion of the world’s 1.7 billion unbanked at last.
At OKEx, we have been following the growth of DeFi with keen interest. Despite our main product being a centralized Bitcoin (BTC) exchange, we believe that the two ecosystems can coexist. We believe that there is a place for the traditional financial system alongside Bitcoin and other cryptocurrencies, so there will be a need for centralized exchanges. Yet, the panorama is certainly beginning to shift.
Major exchanges have been moving their focus to a new area: the public chain. And, unlike our competitors, at OKEx, our vision is for OKChain to be fully decentralized and not to be just an extension of our core business. We believe there is a need, indeed, a responsibility, for all of those who can contribute to the growth of the burgeoning DeFi space.
Fiat-to-crypto exchanges will always be an important fiat currency deposit channel for the crypto world. However, as the recent incident with Wirecard has highlighted, they cannot be the only way to acquire more fiat on-ramps.
The rise of C2C trading
One important and currently underused way of depositing fiat funds to crypto is through customer-to-customer trading. This way, retail customers can securely deposit funds with stablecoins in a completely decentralized manner. This is actually a better choice for many people, given the uncertain regulatory climate and, in some countries, it may even be people’s only gateway into crypto.
C2C trading platforms are constantly improving yet, like everything in this nascent space, more work still needs to be done. Consumers need more education about the right stablecoin or token to use and how to choose a platform that offers security, a good user experience and trading depth. As improvements are made across the industry in this area, C2C trading will become the next essential fiat on-ramps for crypto and push adoption further.
OKEx’s peer-to-peer trading platform in India is a prime example of such a step forward in P2P trading. Through the platform, users in India can buy Bitcoin, Tether (USDT) and other cryptocurrencies with the Indian rupee, using multiple payment methods, including credit/debit cards, PayPal, PhonePe, IMPS, UPI and more.
India is a potentially huge market with a thriving population of 1.3 billion, of whom around 5 million currently own digital currencies. This shows great potential for growth. In addition, the combination of the Reserve Bank of India’s ban on cryptocurrency being lifted on March 4 and the widespread COVID-19 lockdowns has caused the crypto market in India to boom.
The giant strides made in DeFi
The development in the DeFi space has been nothing short of arresting. We are proud to support its inevitable expansion as Ethereum transitions to Ethereum 2.0 and other innovative projects in the space start to hit records left and right. This is why the OKEx Bitcoin exchange jumped at the chance of being one of the first validators on the Topaz testnet for Ethereum 2.0 with our mining pool OK Pool.
This is also why we have been listing some of the most important projects in DeFi, including MakerDAO, Compound, DMM, Synthetix, Aave, Aragon, Curve and Serum. In our opinion, beyond Ethereum, these are some of the most important pillars of the space, with MakerDAO and Compound vying to be the largest DeFi protocols with more than $2.2 billion worth of crypto assets currently locked up combined.
For users around the world to be able to access loans, lend and earn interest on their crypto in P2P transactions is an achievement of untold magnitudes that will eventually change the lives of many people around the world. For the first time, people will be able to sidestep a bank and transact directly from their mobile phones. They can earn interest, access credit, start businesses, send their children to school and lead dignified lives. All of this will be made possible through decentralized finance.
And it’s not just the promise of banking the unbanked or, rather, servicing the unbanked. The current financial system with its near-negative yield on people’s savings and the troublesome prospect of eroding their purchasing power doesn’t possess what DeFi could offer to everyone — the chance to earn real, meaningful interest on their savings. At last, people have access to the tools that the ultra-rich have had for centuries. They can make their money work for them and not the other way around. Through collaboration, innovation and persistence, we really can achieve the goal of #FinanceAll.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Jay Hao is a tech veteran and seasoned industry leader. Prior to OKEx, he focused on blockchain-driven applications for live video streaming and mobile gaming. Before tapping into the blockchain industry, he already had 21 years of solid experience in the semiconductor industry. He is also a recognized leader with successful experiences in product management. As the CEO of OKEx and a firm believer in blockchain technology, Jay foresees that the technology will eliminate transaction barriers, elevate efficiency and eventually make a substantial impact on the global economy.
The Importance of Developing the Decentralized Finance Space
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