American regulators stifle DeFi. One strategist is warning of two existential risks to the DeFi movement. As the organization’s drive towards decentralized finance heats up.. Following a 12-fold increase in the previous year.
Jim Bianco, President of Bianco Research, explained in a recent Yahoo Finance Plus webinar. That DeFi developers have targeted efficiency and cheaper costs. At the risk of remaining fully decentralized. He begins by deconstructing what it means to be a “maximalist”. In the context of cryptography.
“One of the terms we use in the space is maximalist, and you’ve definitely seen it. Related with bitcoin maximalist, which quickly translates to “bitcoin is all you require.” I think it’s ideal — or as near to perfect as you can get with a computer. When it comes to bitcoin, everything else is subpar. Simply make a bitcoin investment and stop there. There is a theory of maximalist [as it relates to] ethereum that has been proposed.
At the end of the day, I believe that either maximalism or conservatism is a very awful idea. It is also a pretty restricting concept, to say the least “BIANCO (BTC-USD.) Does not consider himself to be a bitcoin (BTC-USD) or ethereum (ETH-USD) maximalist. As previously stated.
He then went into detail on what he refers to as “decentralized maximalism”. And why it is important in the crypto realm in order to realize its long-term potential. On top of that, he noticed a trend toward centralization in the DeFi area. Which on the surface appears to be paradoxical, but has emerged for economic reasons. Such as the need to save money and time.
American Regulators know that Non-fungible tokens became increasingly popular
What we discovered with Ethereum… was that it became so popular. Particularly with NFTs — non-fungible tokens — that the network became overburdened. By the sheer volume of transactions that occurred. He also points out that “transaction charges, sometimes known as gas fees. It have skyrocketed to unprecedented levels.”
Because of this, developers have resorted to using cheaper alternatives. On other ethereum-like “layer one” networks, such as solana (SOL-USD). Cardano (ADA-USD), and polkadot (PODD-USD) (DOT-USD). According to Bianco, these networks have been able to significantly reduce gas fees.
“[T]hey discovered that gas prices and transaction expenses were extremely cheap. In some cases, they were less than a penny. And their value has skyrocketed. As a result. But how did they manage to accomplish this? They achieve this by increasing the number of transactions per second processed,” he explains. “And how do they achieve the higher throughput?” says the author. “Do they have a centralized location?”
Bianco hammers home this point, underlining the fundamental danger. With moving toward controlled blockchains and why it’s critical. From a regulatory standpoint that blockchains be decentralized.
“Decentralized refers to the fact that it is an autonomous software. That is not controlled by anyone. Someone couldn’t just walk in and shut it down or start an alternate. This is without it being done in a very, very visible manner,” Bianco explains. “There would be no regulator who could come in and touch someone on the shoulder. And say, ‘We don’t like this action, please make it stop.’ I have no control over it. They do in a centralized society. So you have complete control over it.”