According to a report by CoinDesk, dYdX Foundation’s CEO Charles D’Haussy stated that the current development stage of decentralized finance (DeFi) is akin to the internet in the 1990s, with numerous lessons still to be learned from its developmental experience. Moreover, he believes that DeFi and centralized finance (CeFi) serve different roles, and there is market demand for both.
The “Walled Garden” Moment of DeFi
During an interview with CoinDesk this week at Hong Kong FinTech Week, D’Haussy mentioned that increasing regulatory frameworks and demand for integrated products could drive growth in the niche DeFi sector. Despite the market downturn over the past year, DeFi might experience its “internet” moment with the development of retail products. D’Haussy predicts that the growth of the DeFi market will resemble the recent evolution of the internet—where users primarily interact through applications rather than web browsers. He stated:
Complementary to CeFi, regulatory challenges must be overcome
D’Haussy also noted similarities between the internet and DeFi in terms of regulatory evolution. He explained that in the 1990s, regulators struggled to understand and control the decentralized nature of the internet, seeking a nonexistent “Internet CEO,” ultimately shifting focus to regulating internet access service providers like America Online (AOL) and other ISPs. He believes that while DeFi operates as a decentralized, open, and unpredictable financial ecosystem without central control, regulators will not target the protocols themselves but will focus on CeFi platforms and other gateways as points of regulatory intervention.
D’Haussy concluded that once the market clarifies how to integrate CeFi and DeFi and addresses the regulatory and technical challenges, we will welcome the future of finance. Where will this happen? It could be in Hong Kong—one of the most strategically significant and important hubs for cryptocurrency.
