Stani Kulechev, Decentralized Finance (DeFi) protocol founder Aave highlighted various issues within the DeFi space at the StarkWare Sessions 2023, held at the Cameri Theater in Tel Aviv, Israel.
In an informal talk titled “DeFi: Resilience in the Face of Global Uncertainty”, Kulechov and Alex Cohen, Editor-in-Chief of Cointelegraph, they discussed various topics, such as the risks of DeFi compared to traditional finance (TradFi) and how stablecoins can foster greater adoption of DeFi.
According to Kulechov, the accuracy of risk quantification in DeFi is better than in TradFi products, which could further drive adoption of the space. The founder of Aave explained that operating in DeFi would be cheaper than in TradFi, since the risks are more easily identified. He said:
“You have all this visibility, you can quantify risk more precisely, which should mean you’re operating in an environment where it’s going to be cheaper for you because the risks are better known.”
When asked about bringing regular people into the DeFi space who may not be as “tech-savvy,” Kulechov noted that stablecoins and payments could play a big role. According to the Aave executive, the creation of the “payment layer”, which involves stablecoins, can hook regular people to the space, eventually introducing them to DeFi.
“It’s more about creating that payment layer, and then the whole DeFi loop starts to close because you have a way to easily exchange value,” said. In addition, Kulechov also pointed out that pushing the innovation curve further can end up in more adoption.
However, the Aave executive also acknowledged several issues within the stablecoin space, including the value within the ecosystem and collateralization of decentralized stablecoins. Kulechov explained that:
“The current problem is that there isn’t enough value in the ecosystem that just got less support in decentralized versus centralized stablecoins. And, I think that’s where we have kind of a big problem right now.”
The Aave founder added that stablecoins, which described as the “most resistant”, They are overcollateralized.
Asked about the possibility of DeFi becoming a buzz term in the near future, the founder of the Aave protocol expressed confidence that this space would continue to exist for a long time. it states:
“DeFi will be around for quite some time because it solves one of the first problems that Blockchain technology has been solving. And, it is an infrastructure that is going to be used in many applications.”
The founder highlighted that there are many new innovations in this space, even making their way into non-financial applications.
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