According to a report by CoinDesk, dYdX Foundation CEO Charles D’Haussy stated that the current stage of development in decentralized finance (DeFi) is akin to the internet in the 1990s, with many lessons still to be learned from its developmental experiences. Furthermore, he believes that DeFi and centralized finance (CeFi) play different roles, and there is demand for both in the market.
D’Haussy’s “Walled Garden” Moment for DeFi
In an interview with CoinDesk during Hong Kong FinTech Week this week, D’Haussy noted that increasing regulatory frameworks and demand for integrated products could drive growth in niche DeFi sectors. Despite experiencing market downturns over the past year, DeFi may be poised for its “internet” moment with the development of retail products. D’Haussy predicts that the evolution of the DeFi market will resemble recent trends in internet development, where interactions occur mainly through applications rather than web browsers. He stated:
Complementary to CeFi, Overcoming Regulatory Challenges
D’Haussy also sees parallels between the evolution of the web and DeFi in terms of regulatory changes. He explained that in the 1990s, regulators struggled to understand and control the decentralized nature of the internet, seeking a non-existent “CEO of the Internet,” ultimately shifting focus to regulating internet access service providers like AOL and other ISPs.
He believes that while DeFi operates as an open, unpredictable financial ecosystem without central control, regulators will not target the protocols themselves but will focus on centralized finance (CeFi) platforms and other gateways as points of regulatory engagement.
D’Haussy concluded that once the market clarifies how to integrate CeFi and DeFi and addresses the regulatory and technical challenges, we will usher in the future of finance. Where might this occur? Possibly in Hong Kong—one of the most strategically significant and important hubs for cryptocurrency.