DAS 2021: Could DeFi Make Savings Accounts Obsolete?

With offerings such as yield farming, Vesper’s Matthew Roszak said DeFi could usher in a new era of financial optimization where many people will no longer only use third party intermediaries like retail banks to store their savings

article-image

Source: SHutterstock

share

key takeaways

  • US savings accounts earn an average APY of around 0.06%, according to the FDIC
  • DeFi currently has a total value locked of over $177 billion, according to DeFiLlama

As centralized and decentralized financial markets converge, traditional financial service offerings such as savings accounts could become obsolete, Vesper Finance Co-founder Matthew Roszak said during a panel at the Digital Asset Summit Wednesday.

Roszak said DeFi could usher in a new era of optimization where many people will no longer solely use third-party intermediaries like retail banks to store their capital for an annual percentage yield. (Specifically, savings accounts earn an average APY of around 0.06%, according to the FDIC.)

“I see DeFi as a treadmill for your capital. Your money is always working for you,” Roszak said, citing offerings such as yield farming. “So your capital is always running efficiently based on your risk profile.” 

Roszak described the two coalescing as an “opportunity that’s just too great to dismiss,” but also said the surface area between decentralized finance and traditional finance has “a lot of bridges, roads and tunnels that need to be built.”

“DeFi looks at CeFi and says, ‘Look at all that liquidity.’ Then traditional finance looks at [DeFi] and says ‘20%, 30% yields and it’s sheltered from inflation?’” he said, during the panel. “This is a perfect combo of things to come together.”

The decentralized financial ecosystem still has a ways to go until it significantly changes traditional financial services, said CoinFund’s Head of Growth Vanessa Grellet.

“I want to stress the gap between the two before we try to combine them,” she said in the panel. “On one side, you have open software with developers who are creating innovation and access and in a totally decentralized and permissionless way, and then you have traditional finance who is looking at [DeFi] and saying, ‘Hey, how can I capture those returns? [Those returns] are pretty extraordinary.’”

In August, MetaMask, a popular wallet used by DeFi traders, surpassed 10 million monthly active users, growing 19X in a year. With a total value locked of over $177 billion, capital flowing into the DeFi ecosystem has exponentially grown in recent months.


Are you a UK or EU reader that can’t get enough investor-focused content on digital assets?Join us in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket. Buy it now.


Tags

Upcoming Events

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

ao cover.jpg

Research

Arweave recently launched the testnet for AO computer, a new messaging protocol that will sit atop a PoS network and aims to become a scalable global compute platform through parallel processing and modularity.

article-image

Ore’s price more than tripled as the supply of new tokens paused

article-image

I spend an unhealthy amount of time thinking about crypto securities law — and I can’t see how ETH is now a securities offering under Howey

article-image

Regulators in South Korea, Japan and Singapore could follow Hong Kong’s lead as Asia responds to spot bitcoin ETF approval in the US

article-image

Martin Grant worked with the Fed for roughly 30 years before leaving his position in 2022

article-image

BitGo CEO Mike Belshe shared his thoughts on the halving and bitcoin ETFs in an interview with Blockworks

article-image

Crypto markets were largely the only ones open over a tense weekend, and they took a beating for it