DeFi to achieve mass adoption through institutional engagement, says DEX founder

While decentralized finance (DeFi) token price may dropNew forms of utility like liquid staking are on the rise, and some believe more people could be drawn to DeFi as more institutions rush into the fray.

According to Eric Chen, CEO and co-founder of Injective Labs, while the DeFi sector has seen strong growth since 2020, there are still problems that need to be solved such as gas fees, scalability and liquidity. Chen says that the entire DeFi industry is focused on building the infrastructure to solve these problems.

“It still has a lot of problems to solve before it can serve billions of users. Scalability, minerable value, and gas costs will become more and more important to improve over time. ”

The DEX founder also believes that the growth of this sector can be attributed to the development of new stub products and user growth. Furthermore, Chen also told Cointelegraph that adoption could be driven by the involvement of traditional financial institutions. “With more traditional institutions entering the space, DeFi will gradually get mass adoption,” said Chen.

Delegated DeFi, a form of DeFi that combines decentralization with centralized mechanisms like whitelisting for KYC and AML purposes, can give institutions a boost to DeFi adoption. Chen explains that:

“Authorized DeFi certainly allows traditional organizations to be much more comfortable participating in the ecosystem. It will play an important role in driving global mainstream adoption. ”

Before that in 2022, the liquidity protocol Aave has launched a licensed DeFi pool. Pool allows institutions to access decentralized finance features while remaining compliant with applicable regulations.

Eric Chen, CEO and Co-Founder of Injective Labs. Source: Injective Labs

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When asked about DeFi regulation, Chen mentioned that DeFi is easier to regulate than legacy infrastructures. The DEX founder emphasized that DeFi’s mission is “to provide decentralized, secure and transparent financial services.” Because of this, Chen believes that proper research will provide regulators with an easy way to regulate DeFi.

“With the right research and understanding, regulators will find a much easier time regulating DeFi and preventing malicious behavior than with legacy financial infrastructure.”