As one of the major growth sub-sectors of the cryptocurrency industry, decentralized finance (DeFi) has faced a difficult year amid market dynamics, hacks, and regulatory uncertainty. Its future demands more transparency and clarity in the regulatory landscape, according to a panel discussion held at the International Workshop on P2P Financial Systems 2022 on December 1.
Moderated by Cointelegraph Editor-in-Chief Kristina Cornèr, with Gaspard Pedruzzi, CEO by APWine; Daniel Perez, co-founder of Mero; Hugo Philion, CEO of Flare, and Niall RocheCTO in Residence at University College London School of Management, as panelists, the discussion focused on the future of DeFi in a disruptive landscape around the world.
Perez emphasized the need for transparency for the long-term success of DeFi, as well as the role of central bank digital currencies in promoting core cryptocurrency values to society and restoring trust in the industry after recent events such as the collapse of the FTX cryptocurrency exchange.
“The goal of using DeFi infrastructure is transparency […] Why not OPEC nations should be able to be transparent too. […] If there is a formal, transparent and traceable solution, and it is good to bring more confidence to the sector, like stablecoins, I am not going to say that it should not be there”, Perez commented.
Regulation is a key point for DeFi. As Roche explained, innovation has been stifled by the uncertainty of whether a project that meets regulatory requirements today will be able to do so in the near future. Roche also noted:
“We need clear rules […]. People don’t know limits. We need ways to ensure that the lines are very clear and that there are rules to check that you are on the right side of the line. Otherwise we would find ourselves in this situation where regulation is unclear and innovation is delayed because people will try and shut down.”
Educating people about finance and the technologies that drive innovation is another challenge for DeFi development, as most people learn about cryptocurrencies from friends or on television. The panelists also stressed that communication with society has been focused on making profits with cryptocurrencies, rather than promoting core values such as privacy and decentralization. Philion of Flare stated:
“The main product market right now is getting rich. There’s not really a use case that’s guaranteed to make you rich. But that’s the message we’re telling people. […] I don’t think the main thing we should be marketing to people is a way to get rich.”
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