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Many financial advisers believe that DeFi, as opposed to Bitcoin, is a far more appealing investment to Wall Street. When opposed to the complexities of blockchain technology, mining, and staking, DeFi capital assets may be likened to stocks, liabilities, high liquidity, and short-term yields: something that venture capitalists can grasp.
In a recent podcast with Bankless, Jim Bianco, President of Bianco Research, reiterated the same. He stated that the ‘biggest and best thing that could have happened to Bitcoin’ is DeFi, adding that they were two sides of the same coin. He says:
“They understand the token because it is so similar to what they’ve seen in this space. I could see a day in the future where companies’ capital structure is not just stocks and bonds but it’s a whole variation of tokens as well.”
In that regard, he is not totally incorrect, since many Fortune 500 firms now carry Bitcoin and other cryptocurrencies on their financial sheets. Data from crypto asset management businesses demonstrates that a growing number of advisers and investors are looking to crypto in general, and DeFi in particular, to diversify their portfolios.
Bianco went on to discuss the financial system’s inefficiencies and how venture capitalists would try to capitalise on them, similar to how it happens during the recurrent mergers and acquisitions on Wall Street in the United States. But, according to him, the development of DeFi may reverse all of that by restoring authority to the people. He stated:
“Mergers and VC firms will come in and buy these companies because they think they can unlock value because of the inefficiencies of the current market system. People that buy these companies go private and laymen cant invest in the private equity firms as they are not accredited, investors or advisors. But breaking that down into the token world & all of a sudden anybody can start looking at that value too. The token world can open up a lot of possibilities for a lot of other companies.”
What he meant was that if large corporations with low-cost consumer goods tokenize their shares while also giving an incentive to acquire that token, they will benefit themselves just as much as their customers. Consumers would not need significant sums of money to purchase those tokens, and as the worth of the firm rose, so did the value of the tokens they owned. Small investors may thereby avoid the present stock structure, which favours those with a lot of money to put into their portfolios.
However, in order for such a shift in investor attitude to occur, the DeFi community must step up. To scratch beyond the surface, according to Bianco, a strict definition of the token is required. He said:
“If we could get a definition of what a token is and open up all of the use cases for tokens beyond what we’ve got now, we could see a lot of forward-thinking Wall-Streeters.”
According to DeFi Llama, the entire value locked inside DeFi is $98.68 billion, which is a significant sum when compared to the $1.5 trillion global crypto market worth. DeFi was worth more than $142 billion at its peak, but greater market declines have slowed it considerably. The DeFi boom began late last year and, according to investors, will continue.