Many people are interested in blockchain technology, which makes them do various researches and papers on the innovation. DeFi is a growing blockchain technology that recently gained immense popularity in 2020, primarily because cryptocurrencies’ boomed last year. Central banks are looking into understanding some of the technology’s aspects linked to the recent CBDC trend.
One of the US Central bank’s branches, called the St Louis Federal Reserve, received the paper through a publication on its websites about DeFi and blockchain technology. The paper, titled ‘DeFi,’ had a lot of content about decentralized finance and its unexpected publishing on the Central bank’s website got some attention from the blockchain industry.
Basel professor published the paper
A University of Basel professor, Fabian Schär, specializes in blockchain technology wrote and published the paper on the Federal Reserve’s website. Sources explained that the professor is a member of a group that works towards the growth of technology in finance called Center For Innovative Finance. Technology in finance is currently in demand, with many central banks and companies trying to meet global standards.
The group is part of the university that focuses strictly on fintech. Schär explained through the paper that DeFi technology could bring a necessary change in the financial industry. In the paper, the expert noted that the technology is still small as opposed to the global financial services. Still, he added that some benefits come with the technology, especially in terms of efficiency.
The professor said he understands that the niche is small with unseen risks associated with it, but it has advantages like transparency, accessibility, and composability. He added that the tech could help the current infrastructure be more transparent. The paper did not stop at DeFi; it also spoke about the Ethereum network.
The expert opined that ETH smart contracts could work with DeFi to bring some changes and benefits to the public. He also wrote on centralized exchange tokens and DEX tokens while emphasizing the latter’s importance over the former. Schär mentioned protocols like Uniswap and Aave while highlighting some of their importance.
The blockchain space admires the DeFi paper
The paper, which was recently published, got some admiration from the digital asset space, who understand the professor’s contribution and research. Another blockchain enthusiast, Fred Ehrsam, an executive at Paradigm, opined that no one could make up the paper’s facts. The cofounder shared his view via his Twitter handle on February 8th.
It’s safe to note that the website merely acted as the paper’s host, the Central Bank did not publicly endorse the professor’s opinion, nor did it go against his assertions. What is certain is that the digital asset space is creating some buzz in mainstream media.
Many websites and individuals are now talking about Bitcoin, especially after Tesla’s iconic investment in the prominent crypto. Another source claimed that the GameStop incidence showed that centralized finance could not be relied on, with the third-party threatening the efficiency, leading people into the decentralized financial system.
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