According to Julian Hosp, co-founder of the decentralized finance entity Defi Chain, the fall of the crypto exchange FTX and the domino effect it has had may have rekindled interest in decentralized finance (defi) and associated products. Hosp, however, conceded that the crypto exchange’s dramatic collapse also encourages regulators to adopt a harder line when dealing with crypto entities.
Decentralized Finance Takes Center Stage
While the massive failure of crypto exchange FTX and the chaos that followed is likely to embolden hardline regulators, experts like Julian Hosp of Defi Chain believe the ensuing loss of trust in centralized institutions will likely rekindle user interest in decentralized finance (defi) and associated products. For users who still believe in cryptocurrency’s value proposition — a viable alternative to centralized finance — Hosp said such individuals are likely to switch to self-custody.
As reported by Bitcoin.com News, many users — seemingly spooked by the sheer scale of FTX’s misuse of client funds — have been removing their assets from centralized crypto exchanges. In some cases, the unusually high volumes of withdrawal requests have seen exchange platforms (including FTX before its collapse) struggle or fail to process these in time.
In contrast, defi platforms like Uniswap and Defi Chain have seen their respective traded volumes spike in the same period. To illustrate, Uniswap posted a tweet on Nov. 14 which indicated that the number of active daily wallets on the defi platform had increased to 55,550, a new record. The tweet could suggest that Hosp and other crypto experts’ prediction is already turning out to be correct.
New users of Uniswap’s Web App reached a 2022 high.
Self-custody and transparency are in demand and users are flocking to what they know and trust.
Let’s keep building. pic.twitter.com/IwPqTmx58J
— Uniswap Labs 🦄 (@Uniswap) November 14, 2022
Meanwhile, in a written response to questions from Bitcoin.com News, Hosp noted that the ongoing FTX-related events have succeeded in deterring prospective users.
“Trust is shaken at the moment. While existing crypto users are more likely to move to self-custody and into Defi, new investors will wait on the sidelines until the dust has completely settled, which may take a little while,” Hosp explained.
Going forward, Hosp, who co-founded Defi Chain with U-Zyn Chua, said he expects to see “a downward price movement over the…