Discussing the Future of Decentralized Finance at OFFDevcon De-Fi Dinner

OmiseGO CTO, Kasima, was a panelist alongside Stani Kulechov, founder and CEO of Aave, at the OFFDevcon De-Fi Dinner in Osaka. The talk focused on modern financial services and how De-Fi connects to the customer. 

You can find a full transcription of the talk below the video.

Mod: You have been in the DeFi space longer than most - since 2017 - what has changed, in terms of products or things you’re working on?

Stani: When we launched our mainnet in 2017, it was pretty difficult, there were no stablecoins and lending as a use case was quite limited. Today the space is an ecosystem and there are people dedicated to building products on De-Fi. Now, De-Fi also has a base layer of critical products like stablecoins and lending protocols. I’m excited to see the second layer of De-Fi products in the future.

Kasima: To us, the most interesting thing in the past couple of years has been the maturation of layer-2 scaling solutions. Initially, most of the development was alongside the application layer, which meant that a bunch of de-fi projects that were supposed to gain traction were about to run into each other. 

For example, you had Tether coming in as an ERC-20 token to the transaction space and as a result, the number of De-Fi applications exploded. Now, we’re excited to see some of those projects move to a layer-2 structure, and to them I’d like to say, we’re here for you! 

Mod: Is there much interest to go outside of Ethereum or is De-Fi the narrative and people are loyal to the Ethereum network?

Kasima: I think De-Fi is affable to any ecosystem that wants to address this problem. However, the maximalism in the space feels counter-productive because we’re so early in the process and we could all band together and move this thing along -- it’s a big uphill fight. 

A lot of these ecosystems are optimized for different things, and it’s not all laser-focused on payments at this point. I see projects like MAKER and GitCoin trying to move off, but there’s no need for us to feel pressured because we’re all under the same banner, working towards the same mission. And the best part? Every decentralized network adds decentralization.

Stani: Yes, the main point of blockchain is security, and Ethereum’s security protocols are second to none. The fact that Smart Contracts exist has bought a lot of developers to join together and build financial products. So I guess what I’m trying to say is that we’re all winners here since we’re part of the Ethereum community, and that we should buckle down even more if we can!

Mod: What can and can’t be built with the current tech, is there anything in finance that can’t be built on De-Fi?

Stani: I think in due time, everything we have on finance we’ll be able to build on De-Fi. For example, there are already Credit Default Swaps, Interest Rate Swaps and more. I say this because most of the protocols on finance is built on trust, and once people make the move to a trustless system, there’ll be less friction.

Kasima: I think most of the ‘finance world’ is buildable on De-Fi. The only thing I think cannot be built are high-frequency trading markets.

Mod: It’s nice to see websites like De-Fi Gram and that people are staking and lending within the crypto ecosystem, but how are we going to get wider adoption?

Kasima: We’re going to have to bridge what we’re doing here to the ‘traditional world,’ and things like tokenized assets on chain will help unlock the next user-base. Projects like Monolith can also help with that since they’re trying to connect two ‘traditional payment networks.’ And even thinking and talking about regulations can result in wider adoption. We have to meet people where they are now.

Mod: How can the ecosystem help each other?

Kasima: The "money legos" are where it’s at. What’s interesting for us is how we can move those money legos to layer-2 so that they never have to leave that environment. We’re willing to work with everyone in this room and figure out how we can provide you with the security measures you expect on the root chain, at more scale.

Stani: The entry-level is interesting because it is so low. When I started building projects I was in college, nowadays, financial products on the network are built by those of a non-financial background. It may sound scary in traditional finance, but because De-Fi is so easy to get into and learn, we’re able to build lending protocols, credit swaps, and a lot more. We need to work with each other because of this low barrier to entry, it’ll foster innovation in the long run.

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