![]() In this article, we will examine the top DeFi crypto coins that are currently available on the market. Building the regulatory framework around this new world, however, requires patience as innovators like Gaj solve the problems that hamper the most efficient flow of capital.Decentralized finance, also known as DeFi, is forecasted to become the next big thing in the cryptocurrency and blockchain technology industries. In the event well-meaning coders’ smart contracts go bad, who is left holding the bag? “I got to know about Solidity, and then I learned it in two or three months.” - Gajesh NaikĪllowing the development of the DeFi ecosystem within the existing framework is in everybody’s interests. While Gaj’s success is cheered on by many, it also amplifies the very concerns raised by regulators. The irony of this feat is that at 13 years old, Gaj is not even old enough to open his own bank account, much less pass existing KYC regulations. Since his first foray into DeFi, Gaj has been able to raise and manage over $1.25 million in cryptocurrency in just the past year. Starting with C, C++, Java, and JavaScript, he eventually taught himself Solidity with the help of YouTube lectures and online courses from the University of Buffalo. A self-taught coder, Gaj started coding at eight years old. Gaj was pointed out as one example of whose hands the future of finance rests. With all of the points and counterpoints, the question still remains: Who will build the future of finance?Įnter Gajesh “Gaj” Naik, a DeFi prodigy. Some may argue that regulation is being crafted to better control the growth of the industry. The rising tide of capital flowing into DeFi is meeting headfirst with an equivalent amount of regulation that seeks to better understand the ramifications of a decentralized financial system. ![]() Who will build the future of finance? getty So, Who Will Build The Future of Finance?Īs competing interests vie for validity, the question remains. This concern was raised earlier this year as investors questioned the reserves behind Tether (USDT), the 4th largest stablecoin by market capitalization, which disclosed that only 8% of its assets were held in cash or cash equivalents (Treasury bills and “reverse repo notes”). While holding only 1.5% of its assets in Lehman commercial paper, investors questioned the rest of the portfolio, causing a “run on the bank,” and the fund’s ultimate liquidation. Analogous to the concerns raised when money market funds break the buck, consider the case of the Reserve Fund in 2008.Īs markets struggled to digest Lehman Brothers’ impending bankruptcy, even the safest of financial instruments, money market funds, touted for their stability due to investment in the highest quality assets and short duration, bore the brunt of investors’ doubt. However, the proliferation of stablecoins, poses a challenge for US regulatory authorities as they attempt to understand their inherent risks-key among those is the loss of value (or confidence) in the instruments, especially in times of stress. Their appeal lies in their ability to insulate investors from the price volatility that exists with even the most liquid of cryptocurrencies (thus their duly earned moniker). By some estimates, stablecoins enabled over $1 trillion in transaction volume. Stablecoins are integral to the continued growth of DeFi protocols. The concern around Stablecoin reserves stems from memories that are far too recent and far too. While self-regulation is often offered as a panacea, it is highly unlikely to be accepted. Gox still lingers, the return of almost half of the $600 million stolen from the Poly Network points to a community that is united in finding bad actors, forcing them out of the industry, and preserving its ability to grow within the the existing financial system. The DeFi community has increased the pressure among its participants to heed the concerns raised by regulators. Industry insiders acknowledge that, yes, innovators should be allowed to flourish, but that they should build with the mindset that markets will demand accountability. While it is easy to point to malicious or nefarious activity as the largest driver for enhanced regulation, it does not occur to the extent that regulators fear. Who is working on what projects? When will those projects be “due”? In the case of hacks and smart contracts gone wrong, who is responsible? These challenges revolve around accountability. ![]() These features also pose challenges in building the future of finance in a highly regulated industry. The open source, peer-to-peer nature of the blockchain opens financing possibilities never imagined.
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