DeFi

Regulators should embrace decentralized finance

Published

8 months ago

19 May, 2024

Regulators should embrace decentralized finance

Disclosure: The views and opinions expressed herein belong solely to the author and do not represent the views and opinions of crypto.news editorial.

Currently, the global financial system operates under a veil of secrecy. Global banks are currently undergoing stress tests to determine whether they can withstand large and sudden market downturns. But in some cases, regulators only require that these exercises take place once every two years – and the results can be unacceptably opaque.

It’s only been 16 years Lehman brothers spectacularly, filed for bankruptcy in what was the world’s largest business collapse. Millions of subprime mortgages had led to an unstable financial system and a deep, punishing recession when the bubble burst.

Some lessons were learned at the time. Supervision of big banks has increased and more aggressive affordability checks for home loans have been imposed. Yet despite stricter laws, closer monitoring and more rigorous stress testing, history continues to repeat itself.

Last year, another crisis occurred: that of the Bank for International Settlements. describing it is the “most significant system-wide banking stress” since 2008. Silicon Valley Bank, Signature and First Republic all experienced high-profile bankruptcies, while Credit Suisse suffered a humiliating bailout and a takeover by its rival UBS.

In the span of 11 days, four banks with a staggering $900 billion in assets were closed, creating a contagion effect and a crisis of confidence among consumers. The Federal Reserve’s aggressive rate hikes exposed inadequate risk management procedures at these companies, as losses on government bonds led to large deposit outflows that dealt a fatal blow to their liquidity.

The fact that all of this can happen so quickly painfully reveals the flaws that exist in stress testing. Regulators only have a glimpse of the financial health of the banks that billions of people rely on every day – and when things go wrong, they have to play catch-up.

Worse still, insufficient levels of transparency coincide with an increasingly uncertain economic context. Federal Reserve Chairman Jerome Powell once again admitted that inflation in the United States is taking longer than expected to subside – and that interest rate cuts may not come as quickly as hoped. The increased cost of borrowing is provoking mortgage defaults will increase. Widespread problems in the Chinese real estate market have also casting a dark shadow over the world’s second largest economy, with effects that could be felt elsewhere. Meanwhile, the International Monetary Fund has warned Ongoing conflicts in Ukraine and the Middle East could compromise growth prospects in the years to come.

Taken together, one thing becomes clear: It has never been more important to conduct regular, thorough stress testing to reveal potential vulnerabilities in the financial system, but current methods fall far short of what is required. Decentralized finance offers an attractive alternative and should be adopted urgently by regulators.

Lifting the veil of secrecy

Compared to the smoke and mirrors of the world of centralized finance, which means that significant risks to the health of an economy are only detected when it is too late, defi offers full, real-time transparency.

Defi protocols are autonomous ecosystems governed by smart contracts visible to everyone. They are powered by lines of code that dictate the rules of transactions, eliminating the risks of human error and greed. An open source environment means that anyone can access and examine these smart contracts, making it possible to identify potential problems and take action quickly. This is in the interest of all parties involved: regulators who struggle to achieve stability, businesses who want to avoid costly and reputation-damaging incidents, and consumers who want absolute guarantees that their savings are safe.

So… what does this mean in practice? Well, this ensures that the protocols can be constantly monitored. Through online simulations, experts can examine how a platform’s liquidity and health are affected by a multitude of factors, including changes in interest rates, mass withdrawals, or a sudden drop in asset prices. This provides instant feedback on potential weak points, meaning preventative measures can be put in place. Never before have regulators been able to access such a wealth of data so quickly and verify the financial fragility or resilience of an entire ecosystem with each transaction.

Promote innovation and competition

All of this goes beyond helping regulators meet high standards. Defi also ushers in a new financial era: that of inclusion. Anyone can participate and innovate in the many protocols that exist today and see where their entrepreneurial spirit takes them. While traditional companies have proprietary algorithms and complex structures that create barriers to entry, open protocols foster competition and prevent the formation of powerful incumbents.

This is already having concrete consequences: banks rush to increase the cost of borrowing when interest rates rise, but are slow to reward savers. In Australia, banks have been accused “profit-driven” pricing because there are few competitors in the market. In Belgium, regulators have compared with of the financial sector to an “oligopoly” where competition is suppressed by the big banks. And according to a recent poll, two-thirds of Irish adults said they believe that there is a lack of competition within the banking sector and that it is difficult to turn to other providers.

It’s time to change. By adopting Defi’s transparency and open architecture, regulators can gain a more holistic view of the financial landscape. Real-time monitoring, combined with a decentralized structure, offers the potential for a more resilient and inclusive financial system. Defi’s promise of interoperability, where different protocols interact seamlessly, further fosters innovation and paves the way for a dynamic ecosystem.

The days of opaque financial institutions and inadequate stress testing are over. Defi presents an opportunity for a more transparent, secure and dynamic financial future, and many existing protocols are keen to cooperate with regulators. PwC recently said“There is no investment without trust,” and compliance can really add value to a project and encourage adoption.

The challenge’s potential to revolutionize financial systems is undeniable. Its core principle – radical transparency – offers a powerful tool to prevent future financial crises.. By openly recording all transactions on a public ledger, Defi eliminates the opaque practices that fueled past collapses. Regulators, instead of fearing disruption, should recognize the challenge’s potential as an early warning system, allowing them to identify and manage risks before they snowball.

Edouard Mehrez

Edouard Mehrez is co-founder of Arrow Markets, pioneering a new paradigm for options trading on the Avalanche blockchain. Arrow offers the efficiency of centralized trading with the transparency and security of on-chain settlements. Before joining Arrow, Edward honed his expertise in quantitative finance at MKP. He has a strong academic foundation with a bachelor’s degree in mathematics and economics from UCLA and a Ph.D. in economics from Cornell University.

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DeFi

If You Missed BONK and PEPE This Year, This Viral New Crypto Might Be Your Salvation

Published

6 months ago

29 July, 2024

CoinFlix Staff

If You Missed BONK and PEPE This Year, This Viral New Crypto Might Be Your Salvation

Bonk and Pepe appear set to net new investors 10x to 100x returns over the next 12 months. However, cryptocurrencies in the DeFi play-to-earn gaming sector could offer even greater returns. As August approaches, Rollblock is emerging as a standout DeFi play-to-earn gem with the potential to 100x-1000x gains in the fourth quarter and beyond.

The project features an innovative revenue sharing model and exceptional accessibility, attracting players and investors. Additionally, Rollblock’s extensive game library of over 150 titles and enhanced sports betting are further driving excitement for the platform. Cryptocurrency analysts are expecting a sudden surge in demand. 800% a push for Rollblock from the beginning of September.

Bonk remains strong despite market fluctuations

While most well-known cryptocurrencies struggled throughout July, Bonk remained strong. As one of the highest-grossing meme cryptocurrencies of 2024, Bonk rose over 24% in July, while most cryptocurrencies experienced negative fluctuations.

Investors looking to add a relatively safe memecoin to their portfolio should consider Bonk. While Bonk is unlikely to generate explosive gains of 250x to 1,000x from here on out, Bonk could still theoretically provide returns in the 20x to 100x range.

Pepe should see a big rise in the next bull run

Alongside Bonk, Pepe has yet to go through a bull run. This means that there are still substantial gains to be made from Pepe over the next 12 months.

Pepe is down 4% in 30 days, but that shouldn’t worry Pepe investors in 2024. Experts believe Pepe’s best days are still ahead, with crypto analysts predicting a 10x to 50x surge in the next election cycle around November.

In the long term, Pepe could surpass the 100x mark for today’s investors. However, Pepe is a memecoin, and one should exercise caution when investing in purely speculative assets that have no utility.

Rollblock’s Unprecedented Hype Potential Could Push It Past 100x Valuation in Q4

Rollblock is a GambleFi Play-to-Earn token that integrates centralized and decentralized gambling on a single platform. By allowing players to earn rewards through active participation and gameplay, the platform creates a compelling incentive structure that appeals to both casual and competitive players.

With its cutting-edge blockchain technology, Rollblock offers top-notch security that keeps bets and transactions on the platform secure. The platform’s lack of KYC mandates appeals to both users who value anonymity and security.

Rollblock’s revenue sharing model, which allocates up to 30% of casino revenue to RBLK token holders, is a major draw for investors. The model involves burning half of the repurchased tokens and distributing the other half to stakers, increasing the token’s value and encouraging long-term investment.

The platform is also constantly evolving thanks to user feedback which has enabled updates such as the upcoming sports betting feature within the platform’s casino. This addition will complement Rollblock’s extensive game library of over 150 titles, ranging from traditional poker to innovative blockchain-based games.

RBLK is expected to emerge as one of the leading DeFi tokens in 2024. With a price of $0.0172 with impressive growth potential and over 140 million tokens sold recently, Rollblock is on track to enter the top 100 cryptocurrencies by Q4, making today a lucrative time to buy RBLK tokens.

Discover the exciting opportunities of the Rollblock (RBLK) presale today!

Website: https://presale.rollblock.io/

Social networks: https://linktr.ee/rollblockcasino

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DeFi

Cryptocurrency sector is experiencing ‘most misjudged moment’ since 2020, says venture capitalist Arthur Cheong

Published

6 months ago

29 July, 2024

CoinFlix Staff

Cryptocurrency sector is experiencing ‘most misjudged moment’ since 2020, says venture capitalist Arthur Cheong

Veteran cryptocurrency investor Arthur Cheong believes the digital asset sector offers long-term holders a golden opportunity.

Cheong, the founder of DeFiance Capital, tell His 171,700 followers on social media platform X indicate that he believes decentralized finance (DeFi) is hugely undervalued.

According to Cheong, DeFi projects are innovating at a rapid pace and leaving traditional financial (TradFi) companies in the dust.

“It’s been a long time since I’ve been this excited about the risk/reward and potential upside of DeFi. This is probably the most misjudged moment since the pre-DeFi summer of 2020, with extremely promising prospects.

I see opportunities not only in OG (original) DeFi, but also in some newer projects that are evolving rapidly and growing at a pace that fintech startups will do anything to match.

The veteran investor also believes that crypto is now here to stay following recent launch from the Ethereum spot market (ETH) exchange-traded funds (ETFs) last week.

“Overall, the floodgates are open and there is no turning back. TradFi asset managers will continue to launch new crypto products because, guess what: there is huge demand for them!”

I expect them to launch actively managed crypto ETFs [in the] coming years. ”

Earlier this month, Cheong laid that it might be a bad strategy for cryptocurrencies to seek mass adoption, believing that digital assets are designed to disrupt several key financial sectors.

“I think we should accept that cryptocurrencies may not be suited for mass adoption like Web2, but rather are optimized for some narrow but very high-impact use cases like stateless global money, cross-border payments, and decentralized finance.

Chasing mass adoption of normies may be chasing the wrong Grail from the start.

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