KuCoin Labs, the investment and research arm of KuCoin’s cryptocurrency exchange, has published its annual report which predicts that decentralized finance (DeFi) will remain an important trend in the crypto industry in 2022, and that management will take place through decentralized autonomous organizations (DAOs). .

As the DeFi system continues to be plagued by criminal whales, the risk of financial loss in the sector is becoming more and more apparent. As a result, demands for decentralized financial regulation began to emerge in 2021, and over the past year, the sector has begun to face enforcement.

KuCoin Labs predicts that when regulators turn to DeFi, the industry may turn to DAO management to reduce regulatory risks:

“If DeFi seeks to reduce regulatory risk, DeFi’s governance will gradually become DAO.”
According to KuCoin Labs, a DAO that puts the interests of the community first can realize “true decentralization of governance.” This is the reason why Oslo Børs has predicted that there will be a shift in the industry when it comes to coordinating DeFi management using various mechanisms.

KuCoin Labs also suggested that the basic operating principles of DAO are reasonable enough to be used as a basis for creating legal entities. Although the industry may not see an increase in DAO penetration next year, the report notes that improving the mechanisms could pave the way for companies and organizations to adopt it.

Related topics: How should DeFi be regulated? European approach to decentralization

Meanwhile, the blockchain-based protocol syndicate recently announced that 450 new DAOs were created on their platform over a three-week period. He claims that this represents 10% of all existing DAOs.

In addition, the Marshall Islands recently recognized DAOs as legal entities, which means that they can legally register and operate within the jurisdiction of an island nation in the Pacific Ocean. Taken together, this indicates that the DAO governance structure is already beginning to take hold of the blockchain world.

Source: CoinTelegraph