09.12.2021

What threatens the main crypto projects from the world of decentralized finance DeFi: an expert’s answer

Complete independence from any leverage remains the top priority of the decentralized finance industry. Until today, it is out of sight of regulators, since it is quite difficult to develop mechanisms for controlling DeFi projects.

Yet this is essentially just code that interacts with the blockchain, and no CEOs exist for decentralized exchanges. However, in the future, decentralized protocols will still be under scrutiny, according to Yoni Assia, CEO of the eToro trading platform.

Recall that projects in the cryptocurrency industry can be divided into centralized and decentralized. The difference between the two lies in the availability of a leadership and a user interaction model.

For example, the Binance exchange is centralized. This means that she has a CEO in the person of Changpeng Zhao, an official staff around the world, as well as the need to interact with regulators in different countries and adhere to the legislative framework. At the same time, the Sushiswap decentralized exchange is simply computer code that determines how the platform works. And although the platform has developers, they cannot suspend the exchange or block a specific user.

And although there are fewer levers of pressure on decentralized platforms from officials and governments, it is still possible to influence the situation in the niche. This is what the expert thinks.

What will happen to the decentralized finance niche?

According to Assia, the arrival of regulators in the DeFi sphere will negatively affect the price of the corresponding coins. Here is his quote, in which he shares his attitude to what is happening. The cue is from Decrypt.

The risks of DeFi regulation can greatly affect the price of tokens, the pricing of which is now largely based on the economy of decentralized protocols.

That is, the expert makes it clear that the attention of regulators and officials to projects like the already familiar Uniswap decentralized exchange can negatively affect the price of the native token of the UNI platform. Allegedly, in this case, uncertainty will arise in the niche, which will force investors to get rid of assets.

Assia eToro CEO company

EToro CEO Yoni Assia

According to sources, the possible negative impact of DeFi regulation will also affect eToro itself – the platform supports a huge number of tokens from this area. These include projects like Uniswap, Yearn.finance, Compound, and Maker.

The expert continues.

According to our terms of service, all tokens on the platform are not securities. However, this statement may vary depending on the regulation itself and geographic regions.

This means that the representative of the platform admits that the attitude of regulators to such coins may change in the future. And if, for example, the same UNI token is considered by the departments of certain states as a security, trading platforms will be forced to restrict access to it and suspend transactions.

Assia hinted that the principles of control over DeFi have not yet been fully defined, and the regulators themselves do not know in what context to consider the tokens of decentralized protocols. These are innovative assets, which have never been analogous in history, so it is unlikely that in the near future the DeFi sphere will be “legal” and understandable to traditional investors one hundred percent.

This is interesting: Hacks of DeFi protocols caused the most losses to the crypto market. How much money did the hackers steal?

Following the listing of many new DeFi tokens in April on eToro, there has been a surge in user activity and, as a result, increased profit from trades. Since the end of March, eToro’s client list has grown by 2.6 million, with the platform earning $ 362 million in commissions over the same period.

The head of the platform expects that in the future, the company’s profit will only grow due to the hype – if, of course, the hype will increase. Against the background of all the events, the attention of regulators to eToro in particular will also grow, Assia said.

DeFi runs on the blockchain without the intervention of those who created it. All this is a very interesting open question, which we will be discussing for more than one year.

defi blockchain cryptocurrencies

Sushiswap is a popular decentralized exchange

We believe that there really is a prospect for regulators to intervene in the decentralized finance niche, and this can also affect the price. However, the impact is unlikely to be long-term, since the positive situation in the cryptocurrency market practically rejects any negative news. In addition, in the worst case, the restrictions will affect residents of the United States, and not all countries.

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