The full potential of Ethereum and DeFi is just not understood
With the big crypto market downturn over the last few weeks, many have focused on Bitcoin. But a lot of investors, especially the larger institutions, still haven’t identified how Ethereum and the DeFi space will become a major element in the global financial system.
According to Haohan Xu, founder and CEO of crypto trading platform Apifiny, Ethereum is about to take its place in the sun, and the DeFi sector will rise to prominence in the financial system in the years ahead.
An article on Business Insider featured comments from the CEO, who sees Ethereum rising back to the $4,000 price level. He remarks that in his view, Ethereum is “the best opportunity in crypto at the moment”, and that it will “easily return” to these previous highs.
Xu sees attention starting to leave Bitcoin and come into Ethereum, even though he does think Bitcoin will move higher. He believes that this will be the time for DeFi to shine, as it rides the upward momentum of Ethereum, and as investors move back into a more bullish market.
“Most people have been focused on bitcoin, like some of the mainstream institutions that have been getting in. But they kind of ignore some of the other assets. Ethereum is definitely one of them. They don’t really understand or mention Ethereum as much…Most institutions don’t even understand what an automated market maker is in DeFi.”
“I think it will reach $4,000 easily once you see a little bit of interest back in the crypto space. Any interest that’s coming back to the crypto space right now will mean a lot of driving force for DeFi.”
According to Xu, DeFi will become a major force in the financial system in the years to come. The innovation in the space has led to far more efficient lending and borrowing processes than those in place in the traditional banking system.
Banks are already looking at this success and are starting to investigate how then can integrate such processes into their own businesses.
Xu has an interesting take on central bank digital currencies (CBDCs). He believes that they can actually spell good news for DeFi. He believes that a CBDC could be built on Ethereum that would make a decentralised and automated market maker like Uniswap increase hugely in value. He thought this might be as much as 100x its present value.
He also highlighted the fact that Uniswap had grown far faster than its centralised counterpart Coinbase had done. Coinbase recently listed on the Nasdaq stock exchange and was believed to have a value of £100 billion according to Axios .
Xu is not the only one to have such belief in DeFi. Raghu Yarlagadda, founder and CEO of crypto exchange FalconX, said recently:
“DeFi’s elasticity, 24/7 nature, and opportunity for more significant yield generation in a world of low interest rates bode well for future adoption.”