While the price of DeFi tokens may fall, new forms of tools such as liquidity are on the rise, and some believe that more people may be drawn into DeFi as more organizations enter the fray.

According to Eric Chen, CEO and co-founder of Injective Labs, while there has been significant growth in the DeFi sector since 2020, there are still issues that need to be addressed, such as gas taxes, scalability and liquidity. Chen said the entire DeFi industry is focused on building infrastructure to solve these problems.

“There are still many problems to solve before it can serve billions of users. Scalability, recoverable mining value and gas costs will become more important to improve over time.”
The founder of DEX also believes that the growth in the sector can be attributed to the development of new alternatives and the growth in the number of users. In addition, Chen told the Cointelegraph that adoption may be driven by the involvement of traditional financial institutions. “With more and more traditional companies joining the room, DeFi will gradually become mainstream,” said Chen.

Authorized DeFi, a form of DeFi that combines decentralization with centralized mechanisms such as whitelisting for KYC and AML purposes, may pressure organizations to adopt DeFi. Chen explained that:

“Authorized DeFi certainly allows traditional organizations to participate more comfortably in the ecosystem. This will play an important role in promoting mass adoption around the world.”
Earlier in 2022, the liquidity protocol launched the Aave Permissive DeFi pool. The pool allows organizations to access decentralized finance functions while complying with existing rules.

Eric Chen, CEO and co-founder of Injective Labs. Source: Injection Labs
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When asked about DeFi regulation, Chen mentioned that DeFi is easier to regulate than older infrastructures. The founder of DEX emphasized that Defi’s mission is to “deliver decentralized, secure and transparent financial services.” For this reason, Chen believes that proper research will give regulators an easy way to regulate DeFi.

“With the right research and understanding, it will be much easier for regulators to regulate DeFi and prevent malicious behavior compared to older financial infrastructure.”

Source: CoinTelegraph