Financial institutions will bring decentralized finance (DeFi) to a consumer audience, EY’s blockchain lead Paul Brody predicted for the upcoming 2021.
“I think by the end of 2021, at least one major financial institution will up the game on everybody else by offering some form of consumer DeFi, accessible through their single transactional window to a large consumer base,” Brody commented.
However, Brody’s predictions may seem bold, as the majority of DeFi projects are dealing with lending/borrowing, which is a topic with a steep regulation curve for most institutions.
EY’s blockchain team also noted that banks and other high-profile players are “monitoring the crypto sector closely”, like the recent Square and PayPal expansions into the crypto sector.
Paul Brody has made a name for himself for paying close attention to privacy-oriented technologies like zero-knowledge proofs, and the way such technologies can incorporate public blockchains into big businesses. Brody’s most recent development is the Baseline Protocol, an Ethereum-based reconciliation system for enterprise firms, jointly created with ConsenSys engineer John Wolpert.
According to Brody, there will be two major catalysts for DeFi’s institutional boom, one of them being the testing, auditing, and hardening of smart contracts. The second catalyst would be the inclusion of regulated stablecoins in business operations.
“Regulated stablecoins will make it a more mature sector for institutional investors and for the big money to come in. And while some traders think the volatility of crypto is a feature, not a bug, the value proposition of DeFi isn’t based on the volatility of crypto; it’s based on the ability to put your money to work in an automated fashion,” Brody concluded.
Meanwhile, the DeFi sector continues its rise, even amid most of the biggest cryptocurrencies to date are recording the second day of straight losses. Bitcoin is down two percent, Ethereum fell 1.07%, while Litecoin and Polkadot made a 5-7% price drop.
In contrast, Uniswap gained 10% in its price, while Aave adding 5,3%, with both currencies currently trading at $13.58 and $263 respectively. DeFi’s growth even managed to surpass the negative price movement of Ethereum, which is the blockchain behind the majority of decentralized finance platforms and apps.
The upwards trajectory of DeFi is happening at the same time as traditional markets are bearish, as the Federal Reserve is going to make a statement about a possible reduction in federal support. A possible reduction may cause a chain reaction in the traditional sector, pushing prices of The Dow, S&P 500, and the Nasdaq, which are all currently trading in the red currently.