Analyst: Ethereum will benefit greatly from DeFi “swallowing” traditional finance

For DeFi supporters, as far as the current situation is concerned, DeFi wants to surpass or compete with Wall Street is still a relatively distant dream.

The DeFi application has been attacked by many hackers. For example, a hacker recently stolen $ 25 million worth of ETH and other crypto assets from the decentralized lending platform dForce; and because the public still does not understand or even misunderstand the DeFi protocol and cryptocurrency The situation clearly requires more education on how these DeFi applications work. Despite these barriers to entry, a well-known investor believes that it is only a matter of time before DeFi “swallows” traditional finance.

Investors explain why DeFi will “swallow” traditional finance

DeFi investor and Ethereum supporter Arthur Cheong wrote in The Defiant platform founded by Camilla Russo that because of the universal accessibility and liquidity that DeFi brings, it threatens traditional finance. Cheong explained that with the introduction of Ethereum’s trustless and license-free system, the value of DeFi has surpassed that of traditional banks because it “can provide universal financial services . ” Therefore, DeFi industry can and will provide “on the scale. Better than traditional financial products and services,” he explained by the following illustration of this assertion, showing the chain on the block diagram Ethernet Square stable money supply. Due to the recent shortage of dollars, the demand for “crypto dollars” (stable coins) has risen parabolically, and assets like USDT have filled the gap in global demand for dollars to some extent .


The growth trend of the supply of major stable currencies is worth noting that there is no conclusive evidence that the shortage of dollars in the real world is causing a surge in the demand for crypto dollars, but the timeline does match. The investor added that because applications such as Aave and Compound provide (relatively) higher interest rates, coupled with the low interest rates (or even negative interest rates) provided by traditional banks, DeFi has more reasons to be bullish .

Ethereum will benefit greatly from DeFi

Many blockchains have their own roles in the DeFi field-the Tron network has JUST (stablecoin lending platform), the Bancor protocol runs on the EOS network, and even bitcoin also trades as a cryptocurrency exchange and financial services company Abra medium. But in general, DeFi is a trend centered on the Ethereum blockchain. It is estimated that the Ethereum network has a DeFi ecosystem of more than 800 million US dollars. This means that as DeFi continues to grow, the Ethereum network, especially its native token ETH, will benefit . Ryan Selkis, CEO of cryptocurrency research and data provider Messari, explained that the introduction of the DeFi use case provides ETH with a “higher price cap” than in 2017/2018 and can continue to rise in the next crypto bull market . For reference, ETH assets reached a historical high of $ 1400 in 2018.

Rune Christensen, the founder of MakerDAO, agrees. He recently stated that Ethereum will “attract all value” due to DeFi. He said: “In a recent transaction, only (by pledge) WBTC to cast 4,000,000 DAI This really shows the potential demand for non-ETH assets, which is used as a DeFi. Economic vacuum broader trend begins , Will eventually attract almost all the value to the Ethereum blockchain. “

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