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


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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.

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