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DeFi set to revolutionise global trade

Interest in decentralised finance is growing exponentially, with over $260.9 billion of total value currently locked into DeFi protocols versus $20 billion at the start of the year.

The UAE is making significant strides and fast becoming one of the world’s most blockchain-friendly nations with decentralised finance (DeFi) poised to change the current ways of finance and trade for the better.

The UAE is also working to ensure that proper regulations are in place in order to protect users, according to DeFi experts.

Interest in decentralised finance is growing exponentially, with over $260.9 billion of total value currently locked into DeFi protocols versus $20 billion at the start of the year, says Ahmed bin Sulayem, executive chairman and chief executive officer, DMCC.

Following the launch on Thursday of a special crypto edition of DMCC’s Future of Trade, Sulayem said the DeFi technology is revolutionising financial systems across the world, optimising processes and providing tangible benefits for global trade. “This latest DMCC report closely analyses how we can collectively harness the opportunities presented by DeFi, and what steps we need to take from regulatory and infrastructure perspectives to maximise its impact.”

“It is becoming increasingly clear that DeFi is set to change the current ways of finance and trade for the better. While a few hurdles remain, achieving financial inclusion and democratised yet regulated DeFi protocols is certainly possible,” said Feryal Ahmadi, chief operating officer, DMCC.

“The UAE is a prime example of a jurisdiction that fully supports cryptographic technologies, working with industry leaders to fully understand the technology and make informed policies that support innovation. This is why Dubai is increasingly becoming the destination of choice for many crypto firms looking to scale up their global operations,” said Ahmadi.

The launch of the DMCC Crypto Centre, launched as a partnership between DMCC and CV Labs (a Swiss Venture Capital and Ecosystem firm focused on blockchain), helped usher in an ever-growing number of blockchain/DeFi projects that are flocking to Dubai.

This move was made possible by the signing of a groundbreaking memorandum of understanding (MoU) with the Securities and Commodities Authority (SCA) which established a regulatory framework that grants bespoke licenses for blockchain-related businesses.

The DMCC report considers whether DeFi is a viable substitute for traditional finance infrastructure, or whether it will supplement and become integrated into the current systems. With large institutional transactions (above $10 million) accounting for over 60 per cent of DeFi transactions in Q2 2021, it is apparent that larger institutions are already adopting DeFi, demonstrating a shift in the recognition of DeFi as a legitimate alternative to existing financial systems.

Mauro Casellini, CEO of Bitcoin Suisse Liechtenstein, said the overwhelming trend in financial services today is a strong digital push – and a push towards personalisation. “From global players like UBS and Goldman Sachs down to boutique asset managers and investment advisers, there is no doubt that giving clients what they want, when they want it is the best way to meet their needs. In the words of the long-running Burger King advert – it is nice to “have it your way.”

Ian Simpson, senior marketing & communications manager at Bitcoin Suisse, said after Satoshi Nakomoto helped introduce Bitcoin to the world as a way to put self-sovereign money into the hands of individuals, the pioneering builders of DeFi protocols have taken the vision a step further by allowing people to borrow, lend, create insurance and earn with crypto assets – when they want, where they want.

“The open and trustless nature of blockchain technology has given individuals – whether in the City of London or in the backwaters of the Congo – the possibility to participate in potentially lucrative financial systems with few, if any, large barriers to entry,” said Simpson.

Bernd Oostrum, co-founder at Plenty DeFi, said decentralised finance provides universal access to financial services by transferring the trust layer from financial intermediaries to software and code on the blockchain. “Different DeFi protocols offer services, including borrowing, yield farming, crypto lending, asset storage and more. Today, the majority of DeFi protocols run on Ethereum. The rising gas fees, waiting time, and congestion in the network have resulted in developers and users alike yearning for blockchains like Tezos, that can perform better than Ethereum, if not replace it.” — issacjohn@khaleejtimes.com