Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

I’ll Be Back: DeFi Recovering Despite China and Other Terminations

CryptocurrencyJul 12, 2021 10:00AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
I’ll Be Back: DeFi Recovering Despite China and Other Terminations

  • DeFi performs parallel financial arrangements outside governmental regulatory systems.
  • Cryptocurrency regulations are deemed to increase asset security and inch closer to centralized standards.
  • China’s ban on cryptocurrencies is overshadowed by their digital stablecoin, which illustrates China’s search for increasing surveillance and performing citizen searches.
  • Market corrections enable stable crypto and DeFi protocols with good fundamentals to grow stronger amid price uncertainty.

The state of cryptocurrencies in China is dismantled by the People’s Bank of China, whose goal is to discard autonomous financial systems that can hinder their control status. Decentralized Finance (DeFi), as a disruptive technology, proved money could flow freely without being overseen by gatekeepers. DeFi proposes a trust-less model in the new digital environment, outside the reach of regulatory bodies that leverages network trust to perform transactions. The TVL on DeFi protocols reached a record $80 billion, with only one network carrying the entire weight, as DeFi aims to seize more market fragments.

DeFi in Recovery Mode

By default, DeFi is the next step towards financial independence. Their increased popularity is due to peer’s ability to leverage their digital assets. As argued by ChainLink’s co-founder, Sergey Nazarov, DeFi is piquing the interest from “institutions and fintech and banks,” although the lack of regulations adds additional price volatility. Still, a technology which “wasn’t completely clear” 6 months ago became the most sought-after blockchain product after NFTs.

In contrast to the current market sentiment, which deteriorated as China enforced its cryptocurrency bylaws, DeFi protocols continue to appreciate. WuBlockchain illustrated that DeFi is steadily recovering, indicating a healthy price appraisal from leading protocols. The appreciation in the total DeFi market cap is possibly due to adjusted transaction fees, which are the lowest since 2020, and increased efforts to attract institutional capital.

China’s stance on cryptocurrencies has fluctuated over the years. However, in 2020, over 33,000 blockchain companies registered in the country. As encouraging as that sounds, regulatory measures are rapidly overcome in an industry characterized by fast pace innovation and governmental turmoils regarding crypto acceptance. Still, DeFi’s force was recognized even by strict Chinese regulators before the crypto plug was imminently pulled.

On the Flipside

  • Early to market products cannot show their true potential because DeFi is still dependent on the price of digital-gold.
  • Financial lobbying from central banks could bring more regulatory measures which beat the purpose of crypto’s security.
  • The EU and the US plan on making “anonymous” wallets illegal, which is another sign of harsh regulation on the crypto industry.

An Unlimited Market Potential

DeFi’s potential sprawls in its immutability and transparency constituent. Blockchain and smart contracts have facilitated a secure network, whereas oracle networks related trusted data between centralized and decentralized ecosystems. In that regard, the industry’s potential is only taking shape, as protocols aim to bring new products to market.

AAVE, which outperformed the current market during Bitcoin’s sideways price momentum, announced Aave Pro to target institutional investor capital through private pools by segregating liquidity from regular users. Additionally, Compound Labs announced its “Treasury” division targeting the central bank’s direct customers by using USDC to earn a fixed 4% yearly interest. These new integrations and developments are aimed at increasing institutional adoption by creating byproducts that convey trust. In an interview with DailyCoin, Finoa’s CEO argued that DeFi is becoming a hot topic for institutional investors, mainly because it creates previously unknown financial streams.

Are Regulatory Laws Really Required?

DeFi gained momentum because blockchain ideologists and financially craving individuals saw a unique niche opportunity. Cryptocurrencies sprung from a similar demand; however, institutional interest made Bitcoin gain market acceptance.

In contrast to the underlying protocols and smart contracts, institutional players still seek a regulatory framework to ensure their actions are not intruding with governmental requirements. The Block emphasized that the Global DeFi Coalition, representing 350 crypto firms globally, forwarded 6 measures to the Financial Action Task Force to regulate the DeFi space.

A premature regulatory clampdown similar to that of China hinders the potential to change the outdated financial model, which is failing. The DeFi space is still new, and despite understanding the advantages they bring to the market, institutions are afraid to take action for now.


Join to get the flipside of crypto

Upgrade your inbox and get our DailyCoin editors’ picks 1x a week delivered straight to your inbox.

[contact-form-7] You can always unsubscribe with just 1 click.

Continue reading on DailyCoin

I’ll Be Back: DeFi Recovering Despite China and Other Terminations

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email