Securities recently published a report on decentralized finance (DeFi), which is receiving great attention around the world. Despite the recent controversy over the interest farming bubble, the report gave a positive evaluation of the fundamental purpose and potential of DeFi.
SK Securities published on the 18th'Does it pay tens to hundreds of percent interest? Let's find out about DeFi'. This is the first time a domestic institutional securities company has published a report on DeFi.
The report introduced, "DeFi is in the limelight with the advantage of using blockchain technology to allow anyone to easily use financial services such as loans, transactions, and investments without an intermediary."
The report cited the three advantages of DeFi as △system stability due to decentralization, △efficiency through smart contracts, and △extensibility that everyone can participate in.
First, DeFi explained that because protocols and widely distributed nodes, rather than a centralized institution, play a role of trust, brokerage fees can be reduced in terms of technical and practical terms, and concerns such as hacking or system shutdown are low.
In addition, it takes a lot of time and energy to receive a loan review through the existing financial system or to remit money abroad, but DeFi evaluated that all transactions through blockchain-based smart contracts were fast enough to be made in about 10 minutes and the fees were low.
Finally, the report pointed out that DeFi's strength is that everyone can participate without borders. Currently, 1.7 billion of the world's population do not have a bank account and cannot use banking services, while DeFi mentioned that anyone can participate in the service in the form of P2P.
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Unlike the original intention that anyone can use it, the entry barrier is high... Regulatory issues need to be solved
However, the report pointed out that, contrary to the purpose of DeFi, along with side effects such as the interest farming bubble that has emerged recently, the entry barrier to the use of the service is high, which should be improved.
The report said, "ICO was a very good system for startups that are difficult to borrow investment funds and investors who are difficult to recover investment funds in the middle, but as the number of abuse cases increased, the perception of'ICO = fraud' has grown." It can cause side effects like the recent interest farming foam.”
In addition, he added, "It is a problem that it is still difficult to use by many publics," he added. "(If there are many people who have difficulty using the service), it contradicts the basic purpose that anyone can easily operate financial services without unnecessary intermediaries." In addition, he stressed that management difficulties such as the loss of Metamask password and regulations in accordance with the guidelines of the International Money Laundering Prevention Organization (FATF) are also homework to be resolved.
Analyst Han Dae-hoon, who wrote this report, said, "Expectations for DeFi may be a bubble now, but if the ecosystem is settled well, finance itself will be able to take a leap forward." "It's a subject to try."