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According to DEX’s founder, DeFi will gain broad adoption through institutional cooperation

While the price of decentralized finance (DeFi) tokens is down, new types of utility such as liquid staking are on the rise, and some feel that as more institutions enter the ring, more people will be drawn to DeFi.

While the DeFi industry has seen enormous growth since 2020, according to Eric Chen, CEO and co-founder of Injective Labs, there are still difficulties to be resolved, such as gas fees, scalability, and liquidity. The whole DeFi business, according to Chen, is focused on establishing infrastructures to address these issues.

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

The creation of new primitives and user growth, according to the DEX founder, are also factors in the sector’s growth. Furthermore, Chen told Cointelegraph that the participation of traditional finance companies may drive adoption. “As more traditional institutions join the space, DeFi will gradually gain traction,” Chen said.

Permissioned DeFi, a type of DeFi that mixes decentralization with centralized procedures like as whitelisting for KYC and AML purposes, could encourage institutions to use decentralized finance. According to Chen,

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

A permissioned DeFi pool was launched via liquidity protocol Aave earlier in 2022. Institutions can use the pool to gain access to decentralized financial capabilities while remaining compliant with present rules.

Eric Chen, CEO and co-founder of Injective Labs. Source: Injective Labs


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