Decentralized Finance hasn’t even been around that long, but it’s already had an incredible impact on how we view money. It had a great run in 2020 but still only trades at less than 1% of global banks with $120 Billion in TVL.
DeFi is what banking should be – A permissionless, trustless, censorship-resistant, and decentralized version of a bank. There’s too much friction in the current banking system, and DeFi solves that.
DeFi is also providing the infrastructure for Web3, and it’s evolving as we speak. So there’s an insane upside even though DeFi blue-chips are currently lagging behind the rest of the market.
Where will DeFi go next?
While most of us aped into DeFi, the institutions stayed on the sidelines, but why is that? DeFi is scary to old money, and they need to be assured their money is safe before they ape in themselves.
This is why it’s cool to see DeFi platforms like JellyFi create an institutional investor-friendly DeFi platform.
JellyFi is a capital-efficient DeFi lending protocol that enables crypto loans without collateral. In addition, it creates a derisked environment for institutions through its vetting process. Borrowers and lenders are vetted upfront before allowing access to the platform.
JellyFi offers crypto loans without collateral, similar to a revolving line of credit. However, instead of locking up capital and reducing your capital efficiency, institutional borrowers are provided a liquidity pool they can draw from and deploy at any time.
JellyFi could be the DeFi playground that institutions have been waiting to ape into.
NFTs and DeFi
Lazer DeFi launched as an NFT project first to raise funds as they slowly built their DeFi platform in the background. DeFi and NFTs are a core part of Web3 infrastructure, and Lazer DeFi is a great example of what it looks like when it all fits together.
Your NFTs on the Lazer DeFi platform earn automatic daily yield in the form of xBMF token. The xBMF token is the native currency on the Lazer DeFi platform and will also be utilized in their upcoming game Danger Islands.
Lazer DeFi shows what you can do with the full power of Web3 and an open financial system. In legacy finance, you need a lot of permission in the form of a credit score and dealing with a bank. Bankers determine whether or not you can build your own business.
In Web3, you can raise funds through an NFT and bootstrap the whole project yourself while building a community around it.
Regulation is Coming
DeFi has 2 James Bond villains in the form of Elizabeth Warren and Gary Gensler, and they’re playing hardball with DeFi. However, they both understand that it’s a core part of Web3 infrastructure and how money flows through the ecosystem.
I wouldn’t expect anything less from either. Both have made a fortune on the current banking system, with a combined $132 Million between them. Gary makes up most of that with a $120 Million net worth himself.
Expect some regulatory framework in the near future, but what will that even look like? Politicians are already starting to plant their flag on pro or anti-crypto. The red side sees it as a weapon against the blue side, while the blue sees it as a threat to the current system.
Politicians arguing over DeFi and crypto is among the most bullish scenarios. Despite the fear around regulation, it isn’t as bad as you think it is. Institutions won’t ape in until there is some clear regulatory framework.
Additionally, now that politicians are fighting over crypto, it lessens the chance of it becoming any crippling regulatory framework.
With all that being said, regulation is coming, but that won’t stop the overall momentum of DeFi. There are too many builders and creators in the ecosystem that will move elsewhere if need be.