The DeFi market over 2021 has seen both ups and downs, a panel of experts examined and discussed on Friday, September 24, at The Stanford Defi & NFT Summit 2021. The event was held at Stanford University and hosted by Pledge’s CEO Tony Y. Chan. Top players and leading minds within the industry gathered to discuss strategic topics such as the future of Defi and NFT regulations, building the Next-Generation Blockchain for Decentralized Finance, and the relationship between the world of luxury and NFT.
The panel educated the audience about the DeFi market. In the middle of 2021, the bear market was the worst, the sharp outflow of capital only accelerating with investors pulling out due to the turbulence of significant changes in prices of almost a hundred cryptocurrencies as well as concerns over the growing gas prices (transaction fees) of Ethereum – the main cryptocurrency that is used in DeFi.
Q3, however, has seen a significantly more positive uptrend, with the total value locked (TVL) increasing in both ETH and SOL reaching all-time highs of $124Bn with a 26% month-over-month increase, and $3.3Bn with a +175% increase from July 31st, respectively.
Many DeFi projects demonstrated solid market performances, meeting or exceeding commitments. The most prominent DeFi companies are PancakeSwap (CAKE), Uniswap (UNI), Sushiswap (SUSHI), Curve (CRV), and Aave (AAVE) with +42%, +35%, +35%, +31% and +58% last month return, respectively. August’s crypto market performance was higher than in the previous two months, and BTC and altcoins could make a run to hit new all-time highs which could spur a new wave of overall market interest.
Brian Brooks – The future of DeFi and NFT regulations
Brian began his talk by reflecting on the history of regulation and how its original role was to establish order and eliminate volatility in various segments of the market. When he moved on to the current problems of modern banking systems and over-regulation in this area – it elicited a lively and sincere response from the audience.
As a healthy alternative to outdated and obsolete banking systems comes the concept of decentralized finance. What does it bring to the table? The promise of simplicity, speed, and transparency…OR does it bring chaos, high risk, and lack of any basic norms and standards?
Brian then voiced criteria comparing traditional banking to DeFi such as security, human factors, equality (as non-discrimination) and moved on to the topic of modern regulation and its goals. The driving forces behind the regulation are the intention to expand the turf on the one hand and the attempt to protect the income of certain professional groups on the other.
From this perspective, Brian sees the decentralized finance market as a challenge. Not surprisingly, the U.S. government is in opposition to DeFi and NFTs.
Brian rhetorically asked the audience:
“In 10 more years will most Americans get all of their financial services directly from the government which has advantages but also has real chilling risks or will we live in a world where all of us have been empowered throughout our entire financial complex?”
The most striking problems of the decentralized finance market are volatility, the impossibility to operate with derivatives (except for Bitcoin and Ethereum futures), which for various reasons are also unavailable in the US, and incremental systemic risks.
An additional and important point to mention concluding Brian’s speech, there are two competing camps in the US Government Regulatory bodies: one pro-freedom, standing for market-driven process, another – pro-centralized, standing for government-controlled (China-like) process and the future choice will be probably made during the next year. Even though we have yet to find a compromise between the two systems, they will undergo many more changes.