DeFi
DeFi and CeFi are not mutually exclusive
Decentralized finance is growing rapidly as a market that does not rely on intermediaries. Although centralized finance relies on intermediaries, the two are not mutually exclusive, Sygnum co-founder Gerald Goh told finews.asia.
Decentralized finance (DeFi) is a system that enables activities such as lending, borrowing or trading without the need for intermediaries such as brokerages, exchanges or banks, but instead leverages instruments such as smart contracts to automate certain functions. On the other hand, centralized finance (CeFI) offers the same utility through the use of intermediaries.
“A lot of people tend to view DeFi and CeFi as mutually exclusive,” said Gerald Goh, Singapore co-founder and CEO of digital assets specialist Sygnum, in a conversation with finews.asia. “This couldn’t be further from the truth.”
Regulatory advantage
At a fintech conference hosted by “Money 20/20” in April, Goh spoke on a panel about the disruptive potential of DeFI and its impact on financial inclusion as well as reshaping traditional banking and financial services . However, the panel also discussed the challenges of an evolving regulatory landscape.
“While DeFi projects are known to be a source of innovation, they are subject to increasing regulatory scrutiny,” explained Goh. “CeFi providers, on the other hand, have experience navigating regulatory landscapes and providing DeFi players with the governance structure and protection mechanisms necessary to operate in the financial system.”
Tokenization of assets
Goh shared some of the efforts underway at Sygnum that position it at the “convergence of DeFi and CeFi.”
“We have been involved in projects such as tokenizing real-world assets to reduce the number of intermediaries and leveraging smart contracts to create a more open, accessible and less restrictive financial system,” Goh said.
According to a report According to InsightAce Analytic, the DeFI market has an estimated value of $20.2 billion in 2023 and is expected to reach $398.8 billion by 2031.