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The you think defi a a threat to the future of centralized finance? What's your opinion?

It's probably a supplement to it.

Rather than having individual banks lending to customers and central banks, they're instead lending on one large network of banks.

If someone can offer a 3% return on your currency from another country and all you have to do is digitally sign something from your hq then it'll probably mean most places have a standard interest rate.

Most things of values: stocks, real estate and cars, are easy to link to their owner and easy to sign across to a company if necessary enforcement would have to be done in person and there'd obviously still be risks but if you're investing in a blended lending fund (which defi kinda is) then it wouldn't be too risky imo. There might be less insurance on savings available though too.

I think it is. And vice versa - cefi is a threat to the future of defi (which we all pray for).
At the end of the day customers, majority of users decide what industry will look like - because they pay for service.
If Defi will manage to be not only only more secured, but also more usable and comfortable to use - cefi will get lost once and forever.

As long as decentralized cryptocurrencies functions independently, without the need of bank accounts, without the need of master cards for transactions regarding trading and such, they cannot be considered a threat to centralized bodies.
The decentralized system is entirely different and doesn't have that high of an acceptance rate which ultimately leads people to invest in the centralized bodies. At the same time it does need internet which is not available everywhere and everytime. For us it might be a normal thing but trust me , a large number of population is within internet, without even electricity. Those people do need the simple traditional centralized investments.
Decentralized economy like cryptocurrencies is most likely a luxury which we all have , use and earn through but we cannot just ignored the fact that centralized economic is more or so as important as the decentralized one , or maybe even more ?

It remains to be seen if DeFi is even going to reach that level of importance--it could fizzle out entirely and not be a supplement to anything.  I don't know a hell of a lot about it, but it seems to be a platform for lending for the sake of lending in order to make an outrageous profit.  Almost everything I've heard about DeFi has revolved around how much money you can make, and very little about whether it's a good thing on its own.

What I'm pretty sure of is that traditional finance is going to rule the day unless/until there's a crisis severe enough such that multiple fiat currencies (and I'm talking the big ones) collapse, and the banking system collapses.  If neither of those things happens, there's really no incentive for the average person to use DeFi--just like there's no real reason for the average person to use bitcoin. 

The financial system might have some serious problems, but it's not completely broken yet.

In theory crypto is a threat to banking, on practice it's so small that they don't even notice it. It's even worth with DeFi - there's absolutely zero non-speculative adoption of it, all the DeFi users are just crypto investors who want to multiply their crypto. No one is interested in using DeFi as a replacement for traditional financial services. We've already seen it with ICO, how it was hyped as a killer of traditional investment, and where it is now? There's a very high chance that the same will happen to DeFi.

On a level playing field, yes. If developers build truely decentralized applications on Defi and regulators do their job well/legally/morally,  CeFi or centralized finance will cease to exist and true DeFi will flourish. I think this will likely happen in a Just Society with people strongly following Just Law.

From my opinion, No. Now everyone interesting in DeFi and much investors effected by scam for this interest. I am not saying that, every DeFi is scam. But, From my opinion, speed of DeFi will stopped in future.

I don't see Defi as a threat to the centralized finance but I see it as an opportunity to change for better! Defi is all about sharing risk together, as a stakeholder! Banks also have a Similar structure while lending to corporations which we call consortium of Banks. However, this model isn't followed for retail loans. But the way the world is moving, borderless banking will have to commissioned at some point of time in future!

I think, Defi model will bring in exactly that! Right now, we are not seeing it happening soon, but eventually it will take over!

The application of DeFi as a lending/borrowing platform has some serious flaws and I doubt it could ever realize as a genuine debt market. The first problem is collateral type. Most of the DeFi lending platforms only accept collateral in ETH blockchain assets which are commonly ERC-20 tokens. So in short, borrower is borrowing one ERC-20 token by staking another ERC-20 token on the platform. That's like taking loan in USD by giving EURO (doesn't make any sense to me). The second problem is collateralization rate. DeFi platform charges collateraliztion rates of as high as 175-200%!! So by giving collateral of $2000 in ETH, you with only get loan of around $1000-1200 in USDT. The third problem is fluctuation rate. In traditional lending market, collateral is generally linked with the purpose of loan, for example, house or car. The market prices of such collateral have low fluctuation rates. However, in DeFi, since collateral is mostly another ERC-20 token, prices of cryptocurrencies are highly fluctuating thus creating potential risk/danger of liquidation of collateral.

On top of that, lenders are paid with fictitious tokens which they can lend further to borrow more thus creating ponzi-like structure. With time, current DeFi lending model is reaching a saturation point even with yield farming and once lenders will fail to reap any more profits, remaining DeFi buzz will end as well.   

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Only application area where I am seeing DeFi making an impact is - derivative and capital market. By lending eth tokens, user can create on-blockchain assets and trade them without actually owning the underlying asset. For example, by lending $2000 in ETH, I will receive $1000 in stablecoin (considering 200% collateralization rate). Then I can use these $2000 to further create asset let say, 'Tesla Share'. Since, current Tesla share price is $433, I will receive 2.31 TESLA on Ethereum blockchain and can sell those on derivative market or use them as collateral for further taking a loan, etc. There are many DeFi platforms emerging with this concept however, for this to work seamlessly, we need high-speed cross-platform APIs providing real-time accurate price data which is very hard to get.

Defi projects are one kind of Hype, I think personally. These are not what we think exactly. People are showing more interested in it but if we think, we will be able to find out many defi projects scam already. This will not be a threat for centralized finance.

DeFi with the current design and definition, absolutely not. it is not even legit enough to attract attention. but the decentralization and the movement started by bitcoin is.
eventually the fraud that currently dominates DeFi today will be solved with a better solution that is both decentralized and safe and then it can be considered a competitor to the centralized solution.

collateral-based lending is extremely limiting right now, but it's worth pointing out that in the future, asset tokenization could make defi significantly more useful.

let's assume that titles to real property, automobiles, boats, etc could be tokenized/digitized and precedent could be established where courts recognize these titles as legally binding. conceivably, this would enable defi platforms to extend services to the traditional mortgage and auto lending industries. this could be extended to anything where traditional certificate of titles are used today.

anyway, that's just one way that defi platforms could be actually useful rather than solely being used for speculative purposes.

the major problem for me is trusting these newfangled smart contracts. remember what happened to DAI earlier this year? https://www.longhash.com/en/news/3339/MakerDAO%E2%80%99s-in-Trouble-%E2%80%94-And-It-Could-Shake-Up-DeFi

that's the tip of the iceberg. i dunno how much value i really want locked up in contracts like that.

I think the biggest sign of that is Uniswap’s trading volume. After hitting a peak of slightly less than $1 billion in daily volume in early September, those numbers steadily deflated.

In so many press defi has already marked as a service that will become the bank service became obsolete.
You can see what service that has already offered. When the bank has been offering the lending service and defi was able to do that same thing like the bank too. That means it's just the matter of time until it will be replaced.

So many centralized finance institutions have been taking the urgent action to prevent this thing to happen.

I don't think it is.

Defi projects can be gone quickly and go low in value quicker than the volatility that bitcoin has.

I second this. Crypto, mainly bitcoin is more threatening than them. If you look to the exchanges, they're already portraying as if they are the bank. Offering interest accounts which will give revenue to their depositors or investors.

Central financing is not a threat to the future both are needed at work due to the outbreak of the novel coronavirus economic activities are being hampered like in other countries of the world the country's low-income professionals farmers and marginal and small traders are not able to manage their income generating activities. The contribution of the country's low-income professionals farmers and marginal and small traders to the rural economy is undeniable in that case central funding helps them to improve. DeFi projects are currently being scammed so many governments do not support them so they are a threat to central financing.

Traditional banking system offers more loan schemes and more people can be eligible to take such loans compared to the DeFi because where we need to send the same amount of collateral which doesn't really make sense for someone who is in need of money now.

I don't see DeFi as a threat to the banks,because,at the end of the day,banks will simply buy and adopt DeFi technology(if they see potential in it).If there's no potential in DeFi,then this technology will simply die and nobody will use it anymore,just like how the ICOs died,back in 2018.
Seeing DeFi projects and banks as two opposite armies,which are going to war against each other is a big oversimplification.

It's probably more of an intro of something that could be done to better improve what we have today. It still remains to be seen whether it could actually provide to be a supplement to the improvement though, and even if it does actually prove to be a boom, I can hardly see the world actually moving forward to one where defi is the main financial system used. It'd probably turn to something like a Defi-like system being controlled by the government, or something similar, though that could hardly be called a Defi at that point. Well, answers would prove to be shown in the near future if they ever implement Defi as a supplement to what we have right now.

With the current model, DeFi will not able to integrate the 'tokenization of real assets' even if such on-blockchain asset is legally bound. Instead of working on P2P model, DeFi lending platform works on 'liquidity pool' model. Number of lenders together contribute to the pool which is then disbursed to the borrowers accordingly. Hence, there is no clear relationship between the buyer and the seller. It maybe possible that $40,000 I borrowed was contributed by 15 different lenders.

In such scenario, holding and liquidating asset would be impossible because custody of asset cannot be linked to a single individual.

So in short, DeFi model will only work if real value is on blockchain (like tokens) or value is backed by real value (assets created after staking tokens). In order to make tokenization of real assets possible, we will need a middleman who will first take custody of 'digital legally bound on-blockchain asset' on his ETH address. Then he will create another 'set of tokens' whose value will be equal to the value of digital asset less middleman's commission. Then these 'set of tokens' will be distributed to the lenders in ratio of their contribution to the particular loan.

Example: I am a borrower, I want to borrow $250,000 by giving my property having registry value of $320,000 as the collateral. I created smart contract and transferred the rights of my property to the contract address. 10 lenders contributed equally to my loan ($25,000 each) and transferred the amount to the pool' address. Then middleman created another smart contract. DeFi platform sent $250,000 from pool's address to the middleman's contract address. DeFi platform got back 10 TOKENS immediately on its pool address from the middleman's contract address which in turn was sent to each lender's ETH address. Middleman then transferred $250,000 from his contract to my contract address and immediately got my property's digital asset. Now my asset is locked on middleman's smart contract which could only be released once all 10 TOKENS are sent back to the contract address by the lenders.

This system could work out but still be labelled as 'centralized' because custody of property would still be in an individual's control (middleman) even if he won't be able to unlock it from his contract address without lender's permission.

Perhaps, the custody of property should be in the control of multiple randomized reputable  people distributed across the globe to make this decentralized? I think the keys for accessing the property could be decentralized/distributed in this manner.
 I do not completely understand other part of your post. Just responding to clear the quote above^

Yes, there is no threat for banks as two are in different form. Actually people trust bank more than such kind of projects. Banking system will be continuing in future.

You really crack me up buddy ;D ;D ;D
You mean something similar to the image below?
We need to clear one thing, centralized and decentralized finance comes with merit and Demerit

|	SN	|	DEX	|	CEX	|
|	Merit	|	no regulation, quick profit	|	regulations, profit takes time	|
|	Demerit	|	High risk and may loose all money	|	Low risk( except when there is economic trumoil)	|

We may have see another reforming of DEFI but I don't think the current one will have any significant against cex. The image below can't be a threat to centralized finance but to investors.
https://i.ibb.co/phCxWcg/0-wr-VMna6-Jk1-JGQ9-VD.png

i don't think we need to limit things to the current model or bother with liquidity pools. the example above could easily apply to a p2p transaction between two people---ie borrower and title holder. in other words, replacing banks as traditional mortgage lender. as long as the mortgage is in good standing, the title could remain "locked" by the smart contract. if default occurs, it would be released to the lender's possession.


i'm pretty sure it's trivial to do this without custody. the only problem IMO is that we need some sort of trusted third party for attestation purposes, so that both parties can reliably expect the tokenized title to hold up in court.

Decentralized finance truly has no threat to centralized finance, such as banks. Even DeFI is the best alternative financial solution because people will definitely trust banks more than Defi due to the government's authorization, and it existed a long time ago. But as we continue to develop the same as technology, more people will use DeFi.

Humans are still greedy and it will be difficult for them to reach the absolute level of creating an alternative to traditional centralized finance. The infrastructure of blockchain is growing stronger, maybe in the future, we will have new and better DEFI projects but the pump and dump phenomenon will continue to happen at DEFI.
We need more attention from developers and more money from investors to make the crypto market, DEFI strong enough to escape manipulation and organic growth.

Decentralized financing, which moves the digital currency market from speculative and project markets to markets that approach real life, but in a decentralized manner. I think it will be a threat to central finance because it is a more flexible and transparent financial system. Currently, there are limitations on technology but in time, laws will adapt to the changing financial situation and DeFi's place in the world will become clearer.

Bank offers non collateral loans like credit card, persona loan, automobile loans,etc which is never possible with decentralized finance so I don't think people are going to choose decentralized finance over banking on these kind of loans.Which means defi can co-exists along with centralized banking system which may give healthy contribution to the consumer over the profits on one side.

Not at all. Atleast not at the type of pace it's currently at. Once again just like 2017 this is also becoming a scam movement and nothing else. Yes it is a great feature but real life lending isn't merely done for digital assets. This model would terribly fail when it comes to digital assets because there can be no enforcement. Moreover I hope defi also don't end up with a bad image like ICOs ended. Because once everyone thought that IPOs are over and future is ICOs and no good company does direct coin offerings now.

I don't think it's the pace that's the problem, but the direction.  The focus is on all the wrong places.  People care more about the speculation than they do about the technology.  Everyone needs to stop treating it like it's a new way to make money.  Just sit back and watch while the legitimate coders make the basic concept work as intended.  Avoid all the projects that are churning out worthless tokens for no real purpose.  Those are just a waste of everyone's time and effort.

DeFi isn't going to become a success by people buying and selling useless tokens.  It's going to happen by finding a viable use-case and providing benefits that centralised finance is unable to offer.  So just keep your distance for now and wait until it functions properly and there's an actual point in using it.

DeFi was supposed to be a threat to traditional finance but it has become a kind of conduit for centralized finance to find a way to transform the crypto scene. The crypto crowd is slowly getting involved with the financial. engineering that defines traditional finance. Derivatives, Risk-weighted imvestments and what not. Traditional finance is finding a way to scale its speculative products to the smallest of the investors.

DEFI has a small capitalization compared to traditional finance. They are relatively new and do not have the same legal basis as traditional centralized finance.
When everyone is ethical, qualified enough to develop DEFI projects well enough, that is a current financial threat. It will take a while for this to happen, perhaps we will start with the CBDC digital currency issuers.

This threat to the banking sector will only become noticeable when the majority of people will be able to use cryptocurrency and will have an understanding of how decentralized Finance works. And currently, it is much easier for an ordinary person who is not connected with the cryptocurrency market to contact a traditional Bank.

https://www.forbes.com/sites/billybambrough/2020/05/30/jp-morgan-bitcoins-biggest-enemy-suddenly-appears-to-be-going-all-in-on-crypto/#7a4c3a3523a6
JPMorgan—Bitcoin’s ‘Biggest Enemy’—Suddenly Appears To Be Going All In On Crypto

Banks have already realized that if it is impossible to fight against such an enemy, then bitcoin can be bought and managed.
There will be services like PayPal, where you can buy bitcoin or other cryptocurrencies, but you can no longer transfer funds to your decentralized wallet. :D

I work in finance so I've paid especially close attention to the "Smart Contract Finance" bullshit.  I looked in to DeFI and other types of coins/tokens in this "Smart Contract Finance" world.  I did a write up under scams where I go in depth about his this is an unsustainable bunch of nonsense and it isn't real.  Smart Contracts are highly limited and offer to upside to what computer programming can already do and has been able to do for some time.  I would LOVE for someone to prove me wrong, but that's yet to of happened.

https://bitcointalk.org/index.php?topic=5282731.msg55401331#msg55401331

No its not because there’s no big changes in the market right now despite of having the presence of DeFi and still CEX are being used by many traders and investors. If DeFi keeps on working as a hype project and very few are delivering good service then I think its hard for a DeFi to be on top and still people’s choice is CEX.

It won't cease as long as there are people who is not comfortable using Defi, or even trust it as much as they do with centralized finance. And to be honest, having decentralized finance is hard it's like letting people do whatever they want with their money they can even evade taxation with it. Defi will only be a threat if wealthy people starts to quit using centralized financing which I highly doubt.

I don't think so, I guess it's too early to think of this way. Let's see.

Bitcoin is being supported by banks in the US. Regulations related to Bitcoin are being finalized. Bitcoin is being accepted at multiple locations across the United States and globally. The number of people using Bitcoin is increasing over time, and big companies are putting bitcoin in their reserves.




Bitcoin is becoming a global currency with the growth of the internet. Bitcoin is the harmony of economy and technology, which is the product of human economic development. Many economists and financial experts have criticized Bitcoin, but its value continues to rise. This is a reflection of the world's demand for Bitcoin.
Paypal sees the potential of Bitcoin and is trying to make a profit from Bitcoin transactions by including it in their payment system. It is a concession because they understand how big Bitcoin will be. They cannot go against the trend of money, they rotate to survive.

It is a spot on analysis, it is really unsustainable and i knew people could make a ton of money in the beginning but then everything comes crumbling down, the hype will burn out eventually and it is funny to see that people are making a lot of money in a short period of time doing substantially nothing ;D. I am expecting the hype to burn out once the bitcoin rally starts to push for the old all time high valuation.

I support the second comment that says DeFi is a supplement to centralized finance. There are no threats, they are there as a support. I don't know how some people expect this to be, but I think it needs to be a balance between the two. I see crypto as other assets, but it's quite different because unlike the others, you can easily transact/send it to anyone because it's digital.

All these assets, crypto, silver, gold, they are all the same, anyone you prefer to hold is your choice. Fiat is the main currency and these ones can either have more value or less than it. That's why we are using fiat to judge the value of all other assets.

The concept on the mind of people do always makes comparison and competency between Decentralized Finance (DeFi) and centralized finance making a rise for an issue if the existence of DeFi becomes a threat to the centralized body. Yes, there are certain advantage that DeFi can do provide so as the centralized finance as well. Both are two different bodies so no sense that we always bumping those two different finances for they work on different aims and purposes and people have their free will if they wanted to get into DeFi or just stick into the centralized finance. DeFi is not being existent to become a threat to the centralized finance. Such concept is just running freely on people's mindset.

I would like to know about the positive aspect of the decentralized finance other than picking some random shit coins expecting that it could give you a huge profit and there are literally tons of scam projects and i find it as a pump and dump market rather than anything meaningful. You can change my mind if you have argument against that.

DeFi and CeFi are not even comparable. Heck what is CeFi meant to be anyway? We made up that word just to differentiate DeFi and non-DeFi. No company out there is marking themselves as CeFi - correct me if you can though.

They are supposed to complement each other, just like bitcoin is supposed to be a different mode of payment compared to fiat. Some may exxagarate that to other terms but this is the basic.

Point is that DeFi was here for longer time than ICOs and all that offering BS. People saw it because it was hyped recently.

With the way DeFi started, it presented itself as a threat in the industry as you can see all centralized system trying to jump on the trend although greed took over and the focused changed. DeFi became a way to make quick bucks instead of the technology been focused on and improved. Uniswap showed the world the volumes of centralized exchanges can be achieved with dex before then we all taught utvwas impossible.

Taking of loans and also lending because more accessible, DeFi made the centralized platforms that offers all this service become irrelevant. I think DeFi had a shot of posing a threat but got hijacked by quick bucks developers.


Binance exchange is, they're so focus on conquering the centralized finance Industry since it seems their efforts in dominating the decentralized industry isn't paying off, CZ seized every opportunity he sees to tweets the pros of CeFi. Recently they launch a similar feature of farming tokens but unlike with with the DeFi you'll have to stake on their exchange which is centralized.

I hope you don't plan on waiting for this  ;D
The madness caused by the huge gains with bitcoin triggered a madness, not only people who cling to every shittty token thinking or rather forcing themselves to believe that they will get rich just by holding it but also another myth, that everything needs to be decentralized. Seriously, sometimes when I constantly read posts after post on how decentralization is so good I feel like telling people to grab an ax and decentralize their brain first to see if decentralization in a thousand-piece sis that better.


If that number would be increasing that much we would be seeing more transactions than in 2017 which is not the situation.
Besides, there is a technical limit to how many people can actually use bitcoin. And no, crypto payments via cards that run on Visa's network don't count.


Not going to happen, I mean, do you know a single thing that has Finance in its name and it's not about making money?

Fair point, heh.  I suspect most people are going to be disappointed when they lose money, though.  Lambs to the slaughter.

The way Defi is trending right now that is making some people think it will take over from centralized finance which is more popular than Defi in the country. Since this pandemic started many defi users quite because of what they are hearing that the project will collapse soon because government is ready to print more money to rise the economy to reduce any kind of digital money. I think Defi is not a threat to centralized finance will has be existing over many years.

Companies do not call themselves cefi, cefi is just the "standard" regular thing, there is no name for it, there is a name for defi because it is not the standard regular thing which is why people put a name on it but that's it. I believe there is a big difference between regular and irregular in the bad sense but there is one in good sense as well.

Don't you believe that "irregular" could also mean anything that is a new invention? Ford for example famously said "if I asked people what they wanted, they would have said faster horses" and that is what defi could be, or may not be at all humanity is filled with failed inventions, there is a million failed attempt for every good one.

Defi is something we are trying right now, trying to get our own economy in our hands and if we can achieve it, it would be world changing, if not it would be just a failed attempt.

But despite this, I must admit the fact that decentralized Finance is not being used by new entrants to the cryptocurrency market. And those who have been working with cryptocurrencies for a long time do not all understand the advantages of this type of lending. But using a traditional Bank helps avoid tax problems.

Things can co-exist together, not all the market takes a share from other markets, sometimes they create their own market which means there is also no need to be worrying about cex and dex or cefi or defi being so different from each other but growing all at the same time, because they can co-exist together.

Literally this is not something I would be knowledgeable about to comment on in an official situation, I am not an expert at all, I have been in crypto world for over 8 years now and I can tell you one thing I learned ; anyone can be wrong. However look at all the crypto coins coming into the market, they grow and become big, but bitcoin keeps growing big at the same time as well, one going up doesn't make the other one go down, hence I believe defi and others could do the same.

Maybe people won't need a bank in the future as they switch to DeFi services. and this has begun to be proven by the presence of many Chinese citizens when dealing with banks, they are dealing with Alipay and WeChat, at least doing this kind of financial behavior without going to the bank. This is proof that the application of DeFi is needed and can develop in the future

Let me guess, you think that not only there is no bank behind WeChat and AliPay but you also think that those two are decentralized? You are just fooling yourself by thinking you're not dealing with a bank, just as some people think that if they have a crypto card there is not a bank behind the payments done via the Visa and Mastercard network.

Nobody is using those defi services, there is currently no real-life application for them all they do is swap tokens all day and pray they go up in price.
Have ever used it for anything else? Ever?


Again, the same question, how are you going to get your own economy in your hand? And more specifically, what's this thing called your economy?


A lot of people argued the opposite, bitcoin was supposed to kill PayPal but, look what's happening, it was supposed to be a banking killer yet thousands each day buy and sell coins while dealing with wire transfers, there are still people who think this defi hype will replace something when in reality there is almost no need for its existence.

DeFi is not like cryptocurrencies

Fiat and cryptocurrencies cannot live (well) together, and in this manner, it is possible to say that cryptocurrencies are threatening fiat (even if purely hypothetically). But financial services are just services rendered by one or another company. If they are now providing them in a decentralized fashion, the same services, can we then claim that there is some kind of threat involved? Personally, I don't think so. It is not correct to speak in terms of threat or danger here. It is the same stuff but done in a different way, yet another different way as there can be many, actually dozens

you have good points regarding the actual usage of defi services. just take for example the yearn.finance, which reached their ATH just last month at about $43k (higher than what btc achieved so far!) , and now look at their current price a month after reaching that price, trading at $11k. but are you gonna ask yourself, where that price coming from? even if it already declines about 4x from its ATH, still that price is ridiculous for an empty platform! no active use case, still their platform is in forever beta stage and yet they have that price tag?
sooner or later, these defi supporters will realize that most of these defi platforms are just pure talk and theres no actual devt going on
so really not thinking here that they will be a threat to the centralised finance. they need to show how their products are influencing the market first, then lets talk if they can really compete with the centralised ones

The good side of this system will enhance the true intension of crypto, no need to let your money being hold by any banks but it can now be access thru online, if this will be developed correctly and no hassle or no problem that take place, it will be supported by more people, it's just the knowledge for those who not aware yet that's needed to enhance letting this new system to be embrace.

In fact, why many countries still hesitate to accept cryptocurrency, because crypto is considered a threat to centralized finances.
Because the government is afraid that crypto will replace the bank system, even though it's just an excessive fear in my opinion.
Similar to DeFi, which is currently trending, it is only used by whales to create hype to generate profits. So DeFi is not a threat to
centralized finances, but only to complement the needs of users who cannot be given centralized finances. Or only to give huge
profits that might not be obtained from centralized finances Because in the end, centralized finance and decentralized finance will go
hand in hand.

Although there have both similar in word finances, they are also different in perspectives. As decentralized finance is not being manipulated nor control by a single person, unlike with cefi or centralized finance. In other words, they are opposite idea that conquering the world of crypto. It is a threat for centralized finance since decentralized have the most valuable term in crypto. We love decentralization because government and bank sucks.

^ Defi remains an ideology that is applicable to some like us nowadays since we have not reached the global acceptance of decentralized currencies. For me, this Defi will still be the absolute answer for equality when it comes to the financial aspect of the economy where it is being backed up of the same value to all nations globally. And to answer OPs post, I can't consider Defi as a threat either a supplement because it has the characteristics of centralized finance as well aside from the fact that centralized is still subject to one absolute government that will control the circulation of the said currency and backed it up of the value which can only be determined by the one who will hold the central finance which Defi does nOt possess.

not just simillar in the word finance but also simillar on how finance works except to thier system of course because one if centralize and the other is decentralize . you already explain above how these two system works but the overall object of the cefi and defi are i think still the same .

to be honest i didnt knew that there are cefi too but cefi are those latoken and other ( i forgot ) that are related to lending ? because that is the first thing that came to my mind when i read the word finance . cefi are first to rise they didnt bloom as big as defi but there are still cefi till now but the question is if defi will also remain when the hype was over .

I have seen threads regarding DeFi in this forum well before the hype started to explode but was not aware that it was here much longer than ICO and if that is the case the hype was methodical to align it along with the bitcoin halving this year and then reap the benefit that comes with it. Either way the team or the group of developers behind these are brilliant so that they could create the hype just in the moment of an expected rally :-\.

Stablecoins like Tether obviously aren't. They are centrally issued, redeemed, and controlled. Tether can freeze and blacklist USDT, etc.

DAI is a lot more decentralized, but not fully, and its centralized points of failure were on full display during the March 2020 crash and its aftermath. In truth DAI is mostly governed as an oligarchy by MKR whales, it can't maintain its dollar peg during extreme crypto volatility, and its collateral backing is now almost half non-bearer assets (including centralized stablecoins like USDC).

https://blog.makerdao.com/the-market-collapse-of-march-12-2020-how-it-impacted-makerdao/

I would say stablecoins can be integrated into Defi very easily since they can be easily tokenized on protocols like Ethereum, but that still doesn't make them decentralized.

That depends on your definition of DeFi

Do stablecoins count as DeFi? Pretty much, if you ask me. Does decentralized trading count as DeFi? Same as well. But there is value behind these endeavors even if there is some hype in it too. There are probably other fields of DeFi that have substance after all. It is like calling all cryptocurrencies shitcoins and ICOs scams, which is not correct. Even if true for the most part. Time will separate the good from the bad as it always happened in the past


I meant decentralized stablecoins, obviously

I think that Defi is overhyped and if it's a threat then not in its current form.

You can see how defi projects are doing. Most are scams and even those that are looking decent were slowly losing value in the last 2 months. Their charts remind me of how XRP looked in the span of 5 years. Big hype followed by constant losses, just like when ICOs came out. Somebody even said that Defi are rebranded ICOs.

Only few of them will really rise to cater the finance community. As early as now, several already exited their scams, so what can you expect from the remaining defi projects? Can they really implement a DeFi platform? Not really thinking that they will be a threat in the centralized finance industry. A long way to go for DeFis to even compete in CeFi.

Why not? it's just that not all DeFi will last. the possibility that has complete features, high liquidity will become real DeFi. for the present, there are still many new DeFi and we have the opportunity to choose

Possibly if it lasts for a long time, but I don't think DeFi will last long. It is like a bubble that is growing rapidly day after day but can disappear at any moment.
Add that it is not available to everyone in all countries of the world, as well as many people still do not trust cryptocurrencies or decentralized financing projects, so that there are many who work in cryptocurrencies still do not understand DeFi well, so it is difficult to say that it poses a threat to central financing.

The Libra project was done in a similar fashion too. Remember the dApps development craze? They went crazy all over the altcoins section at one time after the 2018 huge dump as the next hype and buzzword. Like everyone was developing dApps for everything in this world and as if it was the solution to all problems. Now its DeFi and it is being used in the similar fashion to gather attention and to sell their own products to the public even if they are mostly vaporware.

Point remains same. They are vaporware to a large extent. With a increase in mainstream-crypto adoption we might see some of the projects do good and they actually up developing something worthwhile.

However we might brand some DEXs as so called DeFi, this only proves my point that DeFi was here for a long time but people never took it up as a new term.

With the way all these DeFi of a thing is going I am already losing hope in them. They seem to be heading a direction I don’t like, and that’s making so many people to lose hope in them, because it now looks like some Ponzi and quick money stuff.

But even if they were as good, I wouldn’t say that they are any threat, rather they are there to be making things a lot more easy for those who are ready to adopt these technologies and make use of them. It’s just like comparing Bitcoin and USD, which I wouldn’t say that Bitcoin is a threat to USD, but rather an easy access to the things we want to do.

That's a wrong assumption. In my opinion DEFI will last, because the way it is been developed to operate is quite effective as the banking system. DEFI never serves as a threat to the banking, but it is a step forward in development. As of now it is very very young, but people are slowly getting used to it. The future will be decentralized functioning and bank too isn't an exception. Upon the same DEFI is an advancement in banking and not a threat anymore.

Hyped technologies will always have their day, ico wasn't the first, dapps weren't the only one and defi will not be the sole hype of a new and improved version of blockchain technology neither, but they are the frontier of the tech and that is why they get so much more attention.

This is why I believe defi will become a "help" towards centralized finance, they are not going to be a threat and they are not going to grow so big that suddenly all banking and insurance etc finance world will change. Nothing can do that, even bitcoin itself fails to do that let alone just one part of crypto world. However what could happen is, these big financial companies can use all these technologies we improve to make themselves a lot better which would increase our adoption and prices as well, that is the angle we should be looking into it.

This is not my opinion alone, but the opinion of many members here and I have read that on the forum, perhaps this assumption is wrong and I hope that DeFi will continue for a long time because it carries great features indeed, in any case I agree with you that the future will definitely be decentralized and the banks and the entire banking system will transform in the future To decentralization.

Too soon to tell, on paper DeFi should be able to almost completely take the place of traditional centralized finance, but when it comes to real world use and practice things could change and it's normal to see some issues that we were not able to notice in theory, I think that DeFi is really the future and it's not going to go away but I believe its current form will/should change and get better in some minor details, and don't ever forget some of what you're seeing right now is pure hype so don't get too much invested in DeFi now and wait for its hype to cool down a bit before any kind of investment in this area, DeFi implementation by large is a very long process and is not going to happen overnight.

DeFi is a threat to centralized finance. The continuing rise of DEX right now and its clients are obviously a big threat to Cefi. More and more people are going to move to the DEX and Defi projects because of the scams and exchange hacks.


Defi is just in the early stages of it. There will be more functions that will soon be developed to it.

Just pointing out that even "decentralized" stablecoins like DAI are rather centralized. They're backed by custodial assets (to hedge volatility) and their governance is highly centralized too.

DAI's failure in March really makes me question the viability of decentralized stablecoins altogether. Collateralization with bearer assets (to produce debt-backed stablecoins) inherently exposes CDP holders to great risk. I just don't know how promising future liquidity will be, given that.

DAI is not the only pebble on the decentralized stablecoins beach

For example, there's EOSDT which seems more decentralized even though it follows the DAI collateralization model (as far as I know). But the question is (actually, two questions), can we have it any other way and is this the reason why we can't call them decentralized? BitShares employs a self-collateralized model, and I can't even imagine that you would ever call it decentralized. However, if we proceed with this assumption in mind, that no decentralized stablecoin is truly decentralized, then what is?

No. It's just a hype. Time will pass and we'll forget about it.
Stablecoins are more useful. And no volatility, which can damage users.I think, that it will replace defi tokens on this finance field. USDT can beat ETH... And as bound to euro, eurg token can be good

I dont see it as a threat to centralized finance because it caters to a different niche market. Big financial institutions can adopt to it but it would take time since it would need to comply with existing laws.

no it's not a threat. Defi is an alternative choice for those who do not trust the current financial system. The presence or absence of DEFI will not affect the existence of a centralized financial system. then whether defi is the financial future? I do not think so. because completely trusting the defi is a mistake. Decentralization means that it cannot be controlled and it is very fragile. so the existing masintream financial system will remain in the future. because we can never fully trust Defi.

No I don't think DeFi is a threat to centralized finance because not all DeFi projects practice what they preach, they claimed they are decentralized but they practice centralized strategies, most DeFi projects team or developers don't even understand what true decentralized is.

The difference between DeFi and the existing financial system is that all financial services are recorded in smart contracts that cannot be changed from outside. However, there are risks of using DeFi, since in case of an error in the smart contract, participants may lose their money. With centralized funding for all of the errors can easily be corrected by the employee.

That's definitely the case

I mean decentralized being immutable and irreversible, on the one hand, and centralized fixable and accommodating, on the other. But this is the price we have to pay if we don't want to have third party risks, which often come down to someone ignoring all the rules or arbitrarily changing them in the process as they see appropriate (and it remains to be see which is worse). As I suspect, we can't have it both ways

I believe that DeFi is a massive experiment, very important for the future of the financial system.

However, is DeFi a competitor to traditional finance?  In my opinion, no.

Modern financiers are people who have power.  IT people have no power, they know how to develop software, but they do not know how to rule the world.  Crypto projects are open source software.  Financiers know how to use modern technology to their advantage.  They will closely follow the success of DeFi, and then receive patents for the most interesting innovative technologies.  Modern cryptographic developments will form the basis of a new financial system. 

Will the new financial system become decentralized?  I'm not sure.

Bank may adopt some features of defi. Ordinary people still prefer to use centralized entities

Maybe if we have true DEFI, the projects out there now are not DEFI projects, when you see the developers having backdoor control of the contracts. For now DEFI is just here to compliment CEFI and nothing else, both will serve their users since the room for both to grow is very huge

"Is DeFi really a threat to centralized finance?"

I think we need to look at problems from a different angle.
You should not oppose them to each other.
The market always finds the best option for both parties.
They are equally useful.

The threat in fact is huge when there is a massive adoption of cryptocurrencies. The defi ecosystem has already replaced many banking services (but this requires collateral). The user does not need to ask permissions, submit applications, wait for answers. Outside, I do not like what PayPal offers, but they need to thank them for popularizing the cryptocurrency. I hope after a while people will think about it and ask the question: how to work without intermediaries?

Just they are working along at the moment they will continue doing so. In my opinion, there is no threat to anyone, it is just that defi will grow and its market share will increase significantly in coming years and it will become first choice of modern users and tech enthusisats.

Technology and especially new disruptive tech is always a threat for traditional rules of business so yes it will challenge both centralized and traditional finance businesses but do not think that it will happen over night because it think it will tale many years before defi can grow that big.

Well said mate, it is one thing to claim to be decentralize finance platform and it is another to actually act upon it or practice it, I think the real Defi project in today's market are very few, and to me I don't think many people use the Defi platforms anyways so how will they be a threat to centralize finance or traditional financial services, they don't even come close.

Being a crypto enthusiast i am very excited about the defi projects and it is going to be the biggest financial sector product in the future because of the features that centralized platforms fail to provide, the biggest things being the transparency, low costs, higher returns and being sure of no middle man involved.

All investors don't focus on privacy. Big investors have focused on privacy and the rest of the investors focus on profit from altcoins. Here no one can't kill others process, because both types of investors exist. Look at the Binance exchange, Binance dex already revealed where we know that Binance exchange is the top centralized exchange.

If by centralized finance you mean nexo, celcius, monaco and others then i do not think that there is any threat because if you see the stats and market conditions you will see that both centralized and decentralized finance based projects are growing the only requirement is quality, transparency, authenticity, compliance and obviously benefits to users and investors.

And it will remain like that, just an experiment and i doubt that it will shake up the traditional centralised finance. And look at the state right now, although billions might be flowing to the Defi ecosystem, but yet hacks are getting prevalent nowadays that might give people the reason to stay more and leans toward the old centralised system.


IT people have no power? Bill Gates? Bezos? Steve Jobs? They can if they want but they know that they can be billionaires and super rich without touching any of the finance system.

I just think the opposite or I can not say that something that you think is impossible is the truth. we won't know how the finance in this crypto market will last for a long time. what we know is the current condition, when DeFi in fact has improved the state of the crypto market. the power is shown in the future we will not know. it could be that everything you think is a dream can happen.

IMHO, In the present status of the DeFi projects, I believe it's not a treat. because today's Defi is just more on hype and no solid foundation to anchor it, Because there's a lot of issues to settle first like those fraudulent activities of those so-called DeFi projects that rampantly victimized investors it's a shame on their side and now claiming DeFi is a treat to centralized Finance no way I dont believe that crap.

real defi will more likey replace many finance industry, and yeah if defi gain more adoption on real world not only just hype and farming coin.

at this moment still early stage of defi, mostly only run by P&D group and scammer, still experimental use

buterin already warned ppl who use so much money on smart contract, attracting hacker and experimental project became messy situation

I don't consider DeFi is a treat to the Centralized Finance. Centralized finance is still more popular and most preferable to maximum investors. Decentralized Finance may be threat to the Centralized Finance in the future if the new projects developers develops DeFi randomly. Still DeFi is a new system, it isn't free from risk of hack.

This is a very interesting topic for discussion! 

Can IT Professionals Come to Power?  Science fiction writer Robert Heinlein thought not.  He wrote that engineers can make big money.  However, the positions of chiefs will always be assigned to lawyers and accountants.

The battle between lawyers and developers continues to this day.  Mark Zuckerberg (CEO of Facebook) periodically reports on his projects (Facebook, Libra) to American congressmen (lawyers).  The SEC imposes fines on successful crypto projects. 

But will it always be this way?  IT professionals are very smart people.  The modern economy is based on the Internet.  Perhaps in the future the world will be ruled by IT people.  However, the question remains ...

Will these people remain romantics?  What will they create for us - DeFi or a digital concentration camp?

DeFi is not a threat to centralized finance. because Defi doesn't have the strength for it. at this time, people have started to doubt Defi, many Defi projects that only want investors' money. sooner or later Defi's popularity will fade. so before Defi has the power to compete with centralized finance, Defi will be forgotten first.

Why do people always need to have that "stick it to the man!" mindset? I understand that rich people are rich and while we have under 1% that is considered rich enough to not care about money anymore, while there are 50% who are living in or near the starvation levels and only a few that lives a "decent" at best life pay check to pay check that could become starvation if boss fires you.

These are all valid facts that could make us angry against the whales of the world, however how about we elevate everyone without drowning anyone else? Let centralized finance be centralized finance, do not disturb them, do not be against them, let them grow as big as they can, but meanwhile, make defi as big as defi can get as well, make it huge and even bigger than defi but keep cefi alive and huge as well, we can coexist.

i think no. you see the defi mask is slowly unveiling, that its starting to be just another playground for shillers, market manipulators and scammers. you need to do an extensive research before investing your money. centralized finance is more secure and trustful imo.

I don't think it will be at a dangerous level here, because defi or competition will give the existing centralized market a look at how it works and to refine the very system that works today, I know see how people expect defi but the process of change will never be easy because if the existing centralized financial barriers would be solved in some way then we would there is nothing left to compete with here.

DeFi seems to be a thing people like, actually people starting to love those are giving him profit. DeFi hype attract people for some time but that doesn't mean it makes a big threat to centralized finance. Both have priority on their fileds, Centralized Finance is still leading the charge and will be.

DeFi as a substitution for conventional monetary administrations. We've just observed it with ICO, how it was advertised as an enemy of customary venture, and where it is currently there's a high possibility that a similar will happen to DeFi. DeFi today will be comprehended with a superior arrangement that is both decentralized and protected and afterward it very well may be viewed as a contender to the incorporated arrangement.

Defi is a new comprehensive concept it is just getting started i expect a lot more products and services coming under defi umbrella in few months when we will see more and more innovative projects especially the projects working to provide infrastructure to defi to expand in all directions like RadixDLT, with such out class projects defi will gain dominancy and adoption in near future.

Defi can never and will never be a threat to any centralised finance. Defi is really all over the place and doing exceedingly great but despite its growth centralised finance is also needed in Crypto market. So both are useful and Defi phase will soon be over so that's the trend in the market. Lots of innovations.

I think centralized finance is not favorable for people, that's why decentralized finance (DeFi) is created.
DeFi is not a threat, it's just another option for people who want to manage their finance better.
Centralized finance company must improving themselves so they won't lose their user because DeFi is better than CeFi.

Lol are you sure about that?

you can try to get flash loan with defi and what you need to provide the collateral and your identity as requirements to use the service. When you are using the conventional way and you have need to pass the audit that will be done by the bank.

from what i have been writing above and it has proven if the centralized finance can become obsolete caused by defi. Defi is about economic freedom

Once upon a time DeFi aren't a thing, they exist but no one really understand their use case and CeFi was a big thing then, I believe once people start understanding how important decentralized is for crypto user compared to centralized projects they start going for DeFi projects, that's when DeFi Hypes begins, my answer is one can't become a threat to the other, some will still find reason to stick with centralized finance over DeFi

In my opinion, CeFi will still dominate our daily financial transactions. DeFi may be a good and promising concept in the future but there are still many people who don't believe in or know about cryptocurrency yet. There is good potential in the DeFi project but I think CeFi will still dominate

DeFi full form is Decentralized Finance. DeFi is also called open finance and it's an alternative to all other financial services.
The aim of Centralized Finance is to make fair trades, boost more transactions and also increase buying and selling processes. CeFi is a specialized financial service.  CeFi representatives should be concerned about DeFi. DeFi is very popular nowadays. DeFi is very popular cause each DeFi user has control over their resources. No banks, or brokers, or trusted third parties required in Defi. Just need secure and transparent software.
CeFi and DeFi both deliver a wide range of cryptocurrency. DeFi makes the better buzzword, and CeFi makes the better product.  Both centralized finance and decentralized finance aim to achieve the same objective. They intend to make crypto trading popular and increase the trading volume.

If you like the idea of being an early adopter standing for something greater, your choice is DeFi. DeFi is improving day by day. So, it's not a threat to centralized finance but it is a matter of concern for CeFi for sure.

One can survive without the other, both centralized finance and decentralized Finance have their advantages so they are both useful for those who needed them, how can one be a threat to the other? Users can only find one better than the other but that isn't the end

My bet on this one is - defi and cefi are going to be merged together.
Because one day we'll see most of biggest companies run their inner structures on blockchain.
Most of countries will have own cbdc.
Those are the "childs" of defi, but ultimately they're centralized.
This won't kill original "true" defi imo, but won't kill cefi either

I am sure the Bank will also use the Defi system, and will recruit Blockchain in their system,
you know? Defi is not to kill CEFI, but make strength financial programs in this world, and increase trust.

The project about DeFi has been around for a long time, but because in the past the ICO trend was more popular, so DeFi was not very attractive to investors, in 2020 the DeFi hype was huge, finally many new projects appeared about DeFi. But because of this, many scammers appeared which would make a lot of people distrust the DeFi Project because many investors got caught in the scam project.

I will tell yes. In centralize finance people was in high risk about their asset. Always people seek for the newer one.
As defi is very popular now a days and its future is well. So I think it is thread for centralize finance.

Decentralization is naturally the opposite of centralization. However, in terms of finance, many people still use a centralized system because they think that the existing system is more credible, and in terms of decentralized technology, there are still not many large institutions that use this decentralized technology

The most important and should be their very concern is the security aspect. They are managing money and if their security is not that good then be ready for another hacking streak for these defi projects. Really, if a project that manages money couldn't do any better regarding their security they should just close down their defi project. It's crazy to think these people have the guts to create project even without any real experience regarding security. They should atleast consult to a security expert first because their system although forked many times still kinda garbage anyway.

In reality, defi is not a threat to anything in the crypto currency space; defi has been around the crypto hemisphere for a while now, but 2020 seem to be its hype year. Defi is a threat to itself alone and it is one reason why defi platforms has not offered a direct relevance to crypto currency

I recommend you to watch this https://www.youtube.com/watch?v=jo3sZbmdwC8
https://www.youtube.com/watch?v=2DN9W_YbLBM
This guy from PeakDefi explains really well and If you know german they have a webinar about DeFi and the great future on their YouTube channel.