Institutional adoption of DeFi is booming, but gas fees are stunting growth

Panelists at a DeFi-focused to talk held at the BlockDown conference on Thursday expressed their optimism about the past and future growth of decentralized finance, but highlighted the hurdles to adoption due to congestion on Ethereum.

The panel, entitled ‘DeFi’s Latest Waves’, included Anton Bukov, Co-Founder of 1inch Network, Ajit Tripathi, Head of Institutional Affairs at Aave, Hyung Lee, CEO of B. Harvest, and Eric Chen, Co-Founder of Injective Protocol . The panel was moderated by Cointelegraph’s technology editor Andrey Shevchenko (yours really).

Bukov characterized the current crypto cycle as slightly more mature than those of the past, particularly 2017. The projects raising funds today often have a developed product, while initial coin offerings projects were often “just an idea,” Bukov said.

Tripathi shared Bukov’s sentiment, noting that the circle of crypto users has expanded in recent months:

“Crypto whales came in, crypto funds came in [in the summer of 2020]What has changed now is that there are quite a few family offices that put money into Aave. And the only way we know is because, you know, they call us. “

Tripathi nevertheless noted a degree of hesitation in the unknown to some of the potential entrants. In addition, legal restrictions can make it difficult for institutions to spend capital on DeFi. For them, custodial solutions begin to appear:

“Decentralization continues, but what we are starting to see is that more and more DeFi is delivered through custodial interfaces, through fintech. And a lot of what we do is just education, advocacy, educating people about all the excitement. […] We are often very surprised by the extent to which regulated institutions already participate in DeFi. “

Future Progress in DeFi

As a representative of the Cosmos ecosystem, Lee focused on the possibilities of connecting liquidity. In particular, he believes the next stage of DeFi interoperability will be for “more complex use cases” than token transfers, powered by the Inter Blockchain communications protocol.

Chen also focused heavily on scalability, noting:

“What you really need to look at is how to reduce some of the current issues with Ethereum, for example: extremely high gas, the current SMP infrastructure – it works pretty well – but there could be some improvements to that too … ‘rollup lonely island’ issue – the composability and atomic transactions between [rollups] and to Ethereum. “

Bukov then told a story about the 2.5 cm growth, noting that there were different periods of exponential growth:

“What we noticed when we got alive and the project started to gain traction is that during these two years we’ve made exponential scale multiple times. I call it that because we had a situation where, for the past month, we had half the total volume of the project since the beginning. “

The last time this happened for 1 inch was in January 2021, Bukov said. He concluded:

“I agree with the other speakers that gas costs are the biggest pain right now, preventing DeFi from really exploding exponentially.”