Considering all of the potential ramifications associated with DeFi, one has to wonder how the general populace will look at this industry. On Wall Street, some companies are trying to integrate decentralized finance. Others remain on the fence, which may or may not be the smart play.
Wall Street and DeFi
It is evident that cryptocurrencies were not taken seriously by Wall Street in the beginning either. Bitcoin was considered a fad, and altcoins were utter trash. Fast forward to today, and there are numerous Wall Street companies and service providers who offer exposure to Bitcoin and altcoins. While they may not necessarily be that popular compared to others, it makes for an interesting change of pace.
That evolution has taken nearly 10 years. Changing the financial landscape is very difficult, especially when attempting to do so on the outside. Even fintech companies have not noted that much of a success to date. It is an ongoing process, and one that is open to any new competitors with a viable business plan.
Enter the DeFi scene, which remains very popular among crypto enthusiasts. Being able to earn any sort of passive revenue will always attract attention. Yield farming provides exactly that, assuming one owns the correct cryptocurrency. It is not accessible to anyone else just yet, but that situation may change.
A few key Wall Street players have shown an interest in DeFi. Not the decentralized finance solutions found in the cryptocurrency space, though. Instead, major banks will borrow these ideas and even issue their own currency if they receive approval. That may prove to be a key hurdle to overcome, although nothing has been set in stone yet.
Looking Toward the Future
Depending on one’s sources, DeFi may or may not enter Wall Street soon. John Todaro best known for his stint at Citi as a bond trader, is convinced decentralized finance will go mainstream. More specifically, he expects the current developments to primarily benefit Ethereum. A very bold and interesting statement, to say the very least.
Several macroeconomic forces may allow for faster DeFi adoption, with or without the help of Wall Street. The COVID-19 pandemic has exposed a lot of weaknesses and inefficiencies in the global monetary system. Taking advantage of this information will require new financial products and services. DeFi may prove to be a crucial factor in this department.
One potential implication to look forward to is the tokenization of real-world assets. More specifically, DeFi isn’t just about cryptocurrency or new digital assets. It can open the floodgate to investing in real-world assets through blockchain technology. Rest assured some Wall Street higher-ups have taken notice of what the future may hold.
This sffit has already begun when looking at Security Token Offerings. In several instances, the tokenization of real estate has been successful. This is only one example of what the future of DeFi may look like. Many more potential use cases await.