Before serving more consumers, the DeFi business must address scalability, liquidity, and gas concerns, according to Eric Chen, CEO and co-founder of Injective Labs.
While the values of decentralised finance (DeFi) tokens are declining, new types of usefulness such as liquid staking are increasing, and some anticipate that more individuals will gravitate toward DeFi as more institutions enter the fray.
According to Eric Chen, CEO and co-founder of Injective Labs, while the DeFi sector has grown exponentially since 2020, concerns such as gas fees, scalability, and liquidity remain. Chen stated that the DeFi sector as a whole is focusing on developing infrastructure to address these issues.
“It still has a long way to go before it can serve billions of consumers.” Scalability, miner extractable value, and gas costs will all become increasingly critical in the future.”
Additionally, the DEX founder feels that the sector’s success can be related to new primitive development and user growth. Additionally, Chen told that adoption might be accelerated by the involvement of existing financial institutions. “As more traditional institutions enter the area, DeFi will eventually gain widespread adoption,” Chen said.
Permissioned DeFi, a type of DeFi that mixes decentralisation and centralised procedures such as whitelisting for KYC and AML purposes, may provide an incentive for institutions to embrace DeFi. Chen stated as follows:
“Permissioned DeFi enables traditional institutions to participate in the ecosystem much more comfortably. It will be critical in promoting global mainstream adoption.”
Aave’s liquidity protocol implemented a permissioned DeFi pool earlier in 2022. The pool enables organisations to take advantage of decentralised finance while still adhering to present laws.
Chen stated that DeFi is easier to govern than traditional infrastructures when asked about regulation. According to the DEX founder, DeFi’s objective is to “offer decentralised, secure, and transparent financial services.” As a result, Chen believes that appropriate study will provide regulators with a simple method for regulating DeFi.
“With sufficient research and understanding, authorities will find it far easier to regulate DeFi and prevent criminal activity than they did with legacy financial infrastructure.”
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
