Analysts at Morgan Stanley have published a report that suggests that DeFi growth should not be expected in the coming years.
The specialists of the American financial conglomerate said that they do not yet see evidence that DeFi protocols are more efficient than traditional financial systems.
According to analysts at Morgan Stanley, at the moment, DeFi only serves protocol operators, bringing them profit, but not users. In addition, since anonymity is a key feature of the system, decentralized finance is prone to hacks and other financial crimes, the report says.
The company’s analysts believe that limited customer information (KYC) and lack of clear anti-money laundering (AML) regulations will greatly slow down institutional adoption in the future. However, if AML and KYC requirements are introduced, then this will hit decentralization, and the industry will lose one of its main advantages in the eyes of users.
“The overcollateralization of loans suggests that DeFi lending does not increase the money supply. That is, without centralization, customers will not consider decentralized finance as an alternative to the current banking system,” the report says. Morgan Stanley concludes that DeFi will remain a relatively small industry in the coming years.
Earlier, the co-founder of the blockchain company Injective Labs, Eric Chen, said that the decentralized finance industry needs to solve problems with high fees, liquidity and scalability before working with a significant flow of users.
Source: Bits
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