Ethereum’s DeFi: Why the industry is hesitating to adopt it
DeFi continues to be a contentious topic in the blockchain industry. In recent months, the total USD locked in DeFi hit an ATH and is likely to see a significant increase. However with regard to DeFi adoption, many are still a bit more skeptical. Aleks Larsen, Investment Associate at Blockchain Capital in a recent conversation with Chain Reaction podcast’s Tom Shaughnessy highlighted the issues surrounding DeFi adoption.
“The fact that this technology is new. Ethereum is only a couple of years old at this stage. I really don’t think that you can expect there to be any semblance of mainstream adoption at this stage”
He went on to compare DeFi to the early days of the Internet when the platform represented quite a few possibilities but very few early adopters.
Larsen also pointed out how a lot of experimentation and testing exists in the DeFi ecosystem in a bid to find the right model that will work for broader use cases and applications.
When asked about what he perceives to be the reason behind the cryptocurrency industry’s hesitation to adopt DeFi and accusations of tribalism between chains, Larsen said “I think a lot of the criticisms are very fair. I see them mostly from the Bitcoin community and they have a general opposition to anything that they would consider not completely decentralized.”
However, he also claimed that at an early developmental stage completely decentralizing DeFi platform could spell trouble. He stated that “Decentralizing right out of the gate is probably asking for more trouble than the benefit that you get”.
He backed up this statement by saying that if the base layer is not secure and DeFi is substantially decentralized, potential exploits can be catastrophic. “With DeFi, what’s important is the integrity of the functioning of the smart contracts underneath. And core to that is having a really, really secure base layer”