Is regulation good for decentralized finance?At the strike of the pandemic, investors were at a quandary as to where to hedge and protect their investments from dwindling stock values. Then what we saw was the spiking of cryptocurrencies never before seen in the nascent asset class. Institutional investors like Microstrategy, Paypal, Mastercard, and Tesla grabbed headlines by boldly taking steps to include Bitcoin part of their portfolio. Knowingly or unknowingly, DeFi was already riding high playing a huge influence in the all-time highs of cryptocurrencies.Defining DeFiDeFi, or decentralized finance, are digital financial services that allow people to borrow, lend, and invest directly via cryptocurrencies. Blockchain technology is its underlying infrastructure in storing records of digital transactions using automated peer-to-peer agreements called smart contracts, requiring no intermediaries like banks or lawyers.Since the beginning of 2020, the DeFi market grew to become a multi-billion dollar industry marked by its efficiency in processing payments and money transfers across borders, including the provision of opportunities for the underserved to access financial services. These characters found DeFi a huge potential in international trade.DeFi\u2019s Non-AccountabilityDeFi, by its nature of decentralization, however, can be its liability. While banks and regulated financial institutions are covered by sanctions and laws pertaining to the failure of its services, DeFi does not hold a particular entity or somebody to be held accountable in case a technical problem arises like a security breach, hacked data, stolen assets, or a systems collapse. This is mainly due to the fact that DeFi applications function on top of a decentralized platform (mostly on the Ethereum ecosystem) that employs distributed ledger technology. DLTs provide real-time transparent records to every participating computer around the world. These computers, called nodes, decide collectively for the overall behavior of the system. Its global transactional operations make DeFi uncoverable due to\u2026<\/p>","protected":false},"excerpt":{"rendered":"
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