The CEO of Chainlink Labs Sergey Nazarov is saying the nascent decentralized finance (DeFi) space could emerge as a primary competitor of banks and financial technology (fintech) firms.
In a roundtable discussion at the LendIt Fintech Conference, the co-founder of the oracle solutions provider says that DeFi is not going away and will likely capture a significant portion of the market that banks and fintech firms currently control.
[adinserter block="1"]“Let me be very clear with all the fintechs and banks, which I am in every call I have with them – this isn’t going away. This is the internet coming for a big part of your business.”
The Chainlink co-founder argues that users will be drawn to DeFi platforms such as Aave (AAVE) over legacy financial institutions because of the superior return on investment.
“If you’re a bank, if you’re a fintech I would strongly recommend that you ask yourself when and why users will want to use decentralized financial products. Here’s one answer – a bank can give them 1%. On Aave, they can get 8%. The only reason they’re not on Aave is because they don’t know how to get on Aave.”
Nazarov adds that DeFi offers users increased transparency and control relative to traditional financial institutions.
“You thought it was fintech interfaces taking your users. It’s actually this infrastructure that’s going to do everything that institutions do right now. But it’s going to do it in a more controllable by the user, more transparent way.”
The Chainlink Labs CEO advises traditional financial institutions to offer their customers user-friendly access to DeFi platforms to stay relevant.
“If you’re a fintech and if you’re a bank, I think what you should do is think about how can you provide access to these protocols from your interfaces because you own the user relationships…
If you want to keep owning those user relationships, you all know that you have to keep giving the users what they want. And if the users want cryptocurrency now, what they’re going to want soon is the ability to earn interest on their cryptocurrency. And then they’re going to want to be able to use their cryptocurrency in protocols related to derivatives and so on and so on. And the people who give them that access are going to be the people who retain their business.”
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