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In The Financial Industry, Defi Could Be a Common Term In 2021

The founder of DeFi-related fintech Yield expects that 2021 will be the year in which the financial sector will become a "common term" for decentralized finance as the industry is now taking it seriously and developing R&D labs.

Tim Frost, who has worked in the development and growth of early stages of crypto companies such as QTUM, NEO, Paxful, Polymath, among others, estimated that the overall valuation locked up would reach $100 billion in the DeFi market in the next 12 months during an interview with news. He also added:

“In 2021, defi will go through some cycles, but clear winners and value propositions will become clear and evident.”

As reported, Defi platforms like Yield, which recently raised $3.4 million in funding from BnkToTheFuture, Alphabit Fund, have drawn the interest of other companies to provide initial funding among initial supporters in a hybrid round.

Wirex, also a founding partner of the digital banking platform, said that, as with any new innovation in the financial industry, speculation and eventual inefficiencies will still occur. In the sense of cryptocurrency and the peer-to-peer (P2P) nature of DeFi, he feels these are more present.

He proceeded to further describe, though, why investors are involved in DeFi: “To some investors, these are risks that they don’t want to take. However, it can be considered that the ‘Risk-Adjusted Rate of Return’, the trade-off between risk and expected returns or the risk premium that an investor demands for investment participation in defi instruments, will naturally be measured against other mature income-generating financial instruments. We are seeing this today through the outsized returns (>1,000% APY) that can be achieved using complex liquidity mining strategies and re-hypothecation techniques.”

Frost stated that it “opened the eyes to many” on yield farming, as it has brought a lot of attention to DeFi, “and while much of the current form that we know as yield farming will not last, the basic concept of providing liquidity and receiving returns for doing so is very sustainable and the core fundamentals of yield farming.”According to research performed by Crypto Exchange, surveyed 29,574 of its customers, primarily NFT users, 74% of respondents admitted using Defi products.

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