Sonia Shaw , President at CoinW

There were several key impacts on traditional finance resulting from the DeFi summer of 2020 – namely an increased interest from institutional investors , hedge funds and analysts who could not ignore the huge potential to make substantial returns from the rapid growth of so many projects . It also marked an initial showcase of Blockchain ’ s potential to innovate financial products and services for those who ’ d not yet by then been enlightened – significantly the creation of ETFs which continue to capture huge focus of predominant players .

During this cycle , with trading volume reaching up to US $ 14 billion daily , we can expect more sophisticated influences on traditional finance . TradFi has recognised the threat posed by DeFi ’ s disintermediation , and we ’ ve witnessed the development of CBDCs in acknowledgement of that , with banks and other service providers careful to keep up by enhancing their own efficiency and reducing the costs attached to their typical fee-based models . We ’ ve literally just seen HSBC China roll out their e-CNY services to corporate clients and it is only a matter of time before other international banks follow suit in making CBDC available to the whole spectrum of their customer base .

direct correlation to DeFi ’ s impact on the global financial market and there will be no surprise to see traditional institutions merge with decentralised services to make investment in these assets available to their customers .

The issue of the ensuing regulatory challenges puts the ball back in DeFi ’ s court , which as a market can obviously not compete with the well-established frameworks that govern traditional finance . The grey areas created by the underpinning philosophy of decentralisation still run deep when it comes to scepticism around security , fraud and systemic risks . The institutional melee that persists on all fronts when it comes to unravelling how to effectively oversee DeFi activities do not cease anytime soon – the challenge this year is to ensure that those advances do not stifle ongoing innovation in the space .

New investment opportunities such as yield farming and liquidity mining are putting pressure on TradFi to adapt and evolve if they wish to retain investment from those who are fast becoming attracted to the higher returns available elsewhere . The current advances of tokenised real-world assets is also in

Sonia Shaw , President at CoinW

25