The investor talked about a number of benefits that will enable a massive adoption of decentralized finance. As opposed to the traditional financial system that has remained unchanged in its structure, according to Cheong, decentralized finance will allow the sector to be optimized and improved.
Cheong points out that especially emerging markets will benefit greatly by having a more secure way of storing the value of their users. In addition, millions of unbanked people will be able to receive access to the financial system and services that they do not have with the traditional structure. Cheong writes the following:By abstracting time and cost of financial intermediaries, the promise of DeFi is wide — broader access to financial products, programmable money, real-time risk transfer, and auditability of financial contracts. This represents a new phase of financial services development characterized by its transparency and open nature that will bring forward more financial inclusion.
According to Cheong, the use of stablecoins on the Ethereum network already shows how the former have displaced even Ether, in terms of the value of transactions. As can be seen in the graph below, the supply of Tether and other stablecoins has grown significantly during 2020. Cheong believes that by transferring the layer of trust from an intermediary or third party to the DeFi platform software, a “paradigm shift” occurs. In addition, Cheong says DeFi will be able to solve the volatility problem that prevents many people from entering the crypto market. By using stablecoins, consumers will be able to have a secure way to protect their investment.
Author : Reynaldo