While leaders may struggle to understand what’s happening in the crypto-verse, certain sectors are becoming too large to ignore. Sure, popular projects like Bitcoin (BTC) or Dogecoin (DOGE) seem to mark up media headlines. But, below these volatile waters, a revolution is happening, with significant implications for leaders.
Decentralized finance (DeFi), for example, directly challenges traditional finance systems and our current global banking infrastructure – the way leaders typically fund transformation. A tall task indeed. But, with over $200 billion locked into DeFi protocols across multiple projects and blockchains, leaders looking to prosper in the Web3 future need to understand the powerful narrative behind this influx of capital, says Professor Vijay Pereira, Head of Department of People and Organisations, at NEOMA Business School, France. His new research argues that following BTC price increases, there’s a proliferation of cryptocurrencies, which have become a major method used by leaders doing business across national boundaries.
How DeFi is Already Making Waves
First, what’s DeFi anyway? Put quite simply, it’s taking traditional centralized finance systems, like banking, and developing decentralized alternatives with blockchain technology. The space covers about every Traditional Finance (TradFi) sector you can imagine.
Lending, derivatives trading, asset exchanges, borrowing, and payments happen without a centralized authority and on the blockchain. As a result, the space is diverse, and it’s seeing a steady flow of retail dollars and institutional capital.
The blockchain world moves fast. The total value locked (TVL) in DeFi projects rose from $13 billion in early 2021 to its present value at around $200 billion today. Moreover, the number of projects developing new and inventive DeFi technologies is skyrocketing. If leadership stayed on the sidelines for the crypto-insanity of the 2010s, it might have been for the best. With DeFi, though, the landscape is different. The sector is giving blockchain a powerful use-case, and it’s putting the tools of financial infrastructure in the hands of everyday people — and leaders should take note.
Augmenting the Platform — Swim Protocol and DeFi
As it stands, DeFi has a bit of an issue. That issue is Ethereum (ETH). If you don’t know, ETH is the second-largest cryptocurrency by market capitalization and is the preferred choice for DeFi projects and protocols — albeit with cost and throughput…
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