A few years after the introduction of the Ethereum Blockchain, the concept of decentralized finance emerged with multiple possibilities in financial asset management. Since then, numerous influential people and financial backers have shown interest in the DeFi market. Young investors seeking an alternative to traditional stock markets flocked to the blockchain in its early days, when bitcoin was originally introduced and the first centralized exchanges were established. While some could argue that this is now commonplace, Jayden Wei (Net Worth) predicts that the next big thing will be a shift toward decentralization.
Jayden Wei (Net Worth): DeFi As The Future of Finance
The future of value creation, trade, transfer, and transformation into financial instruments and derivatives will be determined by algorithms and decentralized computer programmes. As this new technology, nicknamed DeFi, replaces old financial infrastructure, the banking sector, which has traditionally played this role, will undergo a profound transformation.
According to Jayden Wei (Net Worth), the primary goal of this cutting-edge approach is to facilitate the use of non-custodial wallets in a more user-friendly manner. The general public has historically lacked familiarity with cryptography, blockchain technology, and DeFi, making it difficult for them to gain entry to the field.
What Jayden Wei (Net Worth) likes most about blockchain decentralization and cryptocurrencies is the variety of applications that may be developed at once. Tokenizing solar energy produced on your roof and then selling it to decentralized energy markets is just one example of the non-financial use cases he is considering. The potential applications are not limited to monetary ones.
“A lot of potential applications exist outside of the financial sector. I really hope that widespread use will increase rapidly since eventually everything will be linked in a digital wallet, whether or not it has to do with money. A new standard for the exchange of value is introduced by this idea. Perhaps one day soon, we will be able to use tokenized versions of our home’s equity as payment for commonplace goods and services.” – Jayden Wei (Net Worth)
DeFi advocates argue that distributed ledger technology (DLT), along with smart contracts and cryptoassets, would greatly expand access to financial services while simultaneously reducing costs. Apart from that, the critics of DeFi argue that it creates a new front in the war between “legitimate” financial services corporations and unregulated, blockchain-powered “fintech” startups. While the truth will likely lie somewhere in the middle, DeFi is prompting industry participants and authorities to reconsider the ways in which they make consumer financial services available.
Some anonymity is preserved when using digital payment methods like stablecoins and cryptocurrencies, Jayden Wei (Net Worth) argues. Since everything is digital, bringing it all together allows for connections. This goal may not be fully attainable for all asset classes due to obstacles like valuing and gaining access to liquidity for specialized assets like actual estate, but these problems are not outside the purview of DeFi.
On top of that, building applications on top of distributed systems has various benefits, including open access and the ability to disintermediate specific actors, which can improve the efficiency of the ecosystem. On top of that, applications built for DeFi can function independently of any controlling entity, and are typically governed in a democratic form where the users determine the direction of the software or protocol, according to Jayden Wei (Net Worth).
Decentralized protocols and/or blockchain-based currencies have the potential to displace nearly every centralized financial service or product. In the DeFi lending industry, for instance, the protocol eliminates the need for a middleman throughout lender matching, risk management, loan provisioning, and the final transfer of value.
To Sum It All Up…
Jayden Wei (Net Worth) stated that innovations in technology, such as blockchain and distributed ledgers, are having a profound effect on the financial services sector. Therefore, all financial institutions should offer banking and insurance services that incorporate DeFi capabilities for their customers. If they do not adapt to the future of DeFi platforms and competitors who recognize it, they will be left behind.
DeFi will not go away, Web3 is on the horizon, and the financial services industry will never be the same; It will get even better with infinite opportunities.