DeFi and Crypto: Latest Developments and Future Prospects

By | September 29, 2021

The news about the cryptocurrency industry shows how fast it is developing, opening more and more opportunities for both investors and businesses. DeFi is among the loudest words when the crypto market is discussed.

Felix Mago, a co-founder of Dash Thailand and Futerio, has explained what challenges DeFi can solve, why it is important for the financial sector, and what investors should do before buying crypto.

Felix, what is happening with DeFi in 2021?

The short answer is a lot. It’s almost so much that it’s very hard to keep up. What I see right now is that DeFi is getting bigger very fast, and you can see that by several numbers. One of the most important numbers is TVL – Total Value Locked – and this means how much money people put into smart contracts and lock it up into smart contracts. There are different platforms, and what is happening is that smart contracts aren’t available only on Ethereum, but they are available on other blockchains as well, such as Matic, or the very new is Solana.

So, people have an opportunity to put their money in a variety of financial products and services, which are basically, to put it very simple, traditional financial products on new technical infrastructure. And this means that there are no middlemen, which means that there is usually a lost cost saving factor or, to put it differently, there is a lot of profit that immediately and directly goes to the investors.

Take for example a lending product. Normally, you go to a bank, ask for a loan, they write you fax, a letter, and, at the end of the day, you might or might not get a loan, and you will pay the interest rate to the bank. It has to pay for its staff, to all the people who work there, for the building, for everything that it includes.

A DeFi loan is very direct. It’s all based on smart contracts, which means it’s all based on an automated way of doing this loan. Then in that way, you save a lot of costs.

It’s a big revolution because there are so many financial products. The truth is that DeFi is taking over every single financial product and service that we are used to right now.

In your opinion, how many countries would like to adopt this technology in the future as one of the main financial directions? Some countries have already considered this opportunity for them. El Salvador has recently adopted the law to accept Bitcoins. What about other countries?

It’s a great question. There is a big difference between having cryptocurrency as a legal tender, like El Salvador has done, or being okay with cryptocurrency being used on the national regulations. As for El Salvador, everybody, every shop, every merchant of the country has to accept Bitcoin.

This is one way, and it’s a great way, I am super happy to see that, but the truth is that you don’t need to use cryptocurrency in the country. Basically, we can use cryptocurrency more or less in most countries, meaning we can do trading, we can do a lot of things, but we can’t go to every store and pay with it. In the long run, it will happen, in my opinion, it doesn’t matter if it becomes a legal tender or not. Simply because it will become a new normal to pay with cryptocurrencies.

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