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25 September 2020

DeFi: A shrinking window of opportunity

DeFi: A shrinking window of opportunity


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The window of opportunity has shrunk for several reasons: firstly, because of fraud within the space; secondly, the readiness of regulators to “save” the market from violators by imposing old-fashioned red tape and new restrictions; thirdly, the lack of understanding that emerging crypto companies are pointless under traditional bureaucratic regulations, as fintech itself is the response to their ineffectiveness and constraints.

Moreover, they intuitively understand that the opportunity might be short, and so are more likely to act aggressively and use more sophisticated means of deceit.

Regulations on securities and exchanges in different countries specify formal rules and procedures for financial markets and instruments, which involve registration, licensing, due diligence, Know Your Customer commitments and more.

After years of exploring new technologies and emerging markets, regulators are now more knowledgeable than ever before.

Token sales disappeared from the scene due to two factors: scams that cast a shadow on the emerging industry, and regulators that demand compliance and fine violators.

But the fact is that old-fashioned regulations constrain emerging industries.

A new industry of tokenomics introduced easy ways to access crowdsourcing as an alternative to venture capital funds and traditional financial markets, but the bureaucratic regulations subsequently imposed led to a reduction in token sales.

Therefore, a possible future for DeFi is that the emerging industry has a shorter window of opportunities than others (ICOs, IEOs, STOs, etc.) enjoyed.

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