Dan Schatt of Earnity Discusses DeFi and Traditional Financing


Since it began around 2019, the decentralized finance (DeFi) sector has continued growing at breakneck speed. A study showed that the total locked values of digital assets had risen to $236 billion near the end of 2021. Some see DeFi as a disruption in the financial industry, radically changing how people use financial instruments. Even so, Dan Schatt, CEO of Earnity, sees that consumers will not need to choose one over the other. DeFi and centralized finance (CeFi) can actually co-exist in the grand scheme of things.

Most people will look to want both in the long run, as there are use cases for both financial options, and having a mix of both can provide some advantages. For instance, users who desire to earn more long-term might be willing to take on more risk in putting money in DeFi protocols. Meanwhile, traditional financing products can serve as a hedge because they offer more stability and security.

Even traditional financial institutions are becoming more open to using DeFi products and protocols. The reality stands that many of them, such as banks, are still skeptical about DeFi and blockchain, leading to slow adoption rates. Earnity’s Dan Schatt notes, though, that it is not the intent of DeFi to replace the current financial system. Instead, its goal is to replace traditional technologies with open-source protocols to improve financial services and security.

DeFi can also help in enhancing financial inclusivity in various sectors. For example, small businesses have generally found it difficult to acquire financing compared to those of other business sizes. But by leveraging the DeFi concept of democratizing finances through peer-to-peer philosophies and self-executing smart contracts, small enterprises will not have to rely solely on traditional financial institutions to become sustainable or profitable.

At the end of the day, it is evident that both DeFi and CeFi have a place in the world of finance. The key is to find the right balance for each individual or entity when utilizing these services. What might work for one might not be ideal for another. It all comes down to needs, preferences, and risk appetites.



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