Many financial advisors believe that DeFi is a much cheaper investment for Wall-Streeters than Bitcoin. DeFi investing can be equated with stocks, liabilities, high liquidity, and short-term returns: something venture capitalists can understand compared to the intricacies of blockchain technology, mining, and staking, among others.
In one recently Podcast Jim Bianco, President of Bianco Research, repeated the same thing with Bankless. He stated that DeFi was “the biggest and best thing that could happen to Bitcoin,” adding that these are two sides of the same coin. He says:
“They understand the token because it is so similar to what they saw in this area. I could imagine a day in the future when the capital structure of companies consists not only of stocks and bonds, but also of a whole variety of tokens. ”
He’s not entirely wrong in this regard, as many high-profile companies currently have Bitcoin and several other cryptos on their balance sheets. Data from crypto asset management firms also shows that more and more advisors and investors are looking at crypto in general and DeFi in particular to diversify their portfolios.
Bianco went on to talk about the inefficiency of the financial system and how venture capitalists would try to capitalize on it, as is happening with the recurring mergers and acquisitions on Wall Street in the United States. But the rise of DeFi can change all of that, in his opinion, and bring power back to the people. He said:
“Mergers and VC firms will buy these companies because they believe that because of the inefficiencies of the current market system, they can unlock value. People who buy these companies become private and laypeople cannot invest in the private equity firms because they are not accredited investors or consultants. But if you break that down into the token world, suddenly everyone can start looking at this value too. The token world can open up many opportunities for many other companies. ”
What he meant was if big corporations with cheap consumer goods tokenize their stocks while also offering an incentive to buy that token, they will be helping themselves just as their consumers are. Consumers would not need large pools of capital to buy these tokens, and every time the value of the company increases, the value of the tokens they hold would also increase. This allows retail investors to escape the current equity system, which tends to favor those who already have a lot to invest in their portfolios.
However, the DeFi community would have to take action itself for such a change in investor sentiment to take place. In order to scratch beyond the surface, a strict definition of the token is required, according to Bianco. He said:
“If we could get a definition of what a token is and open up all token use cases beyond what we have now, we could see a lot of forward-thinking Wall-Streeters.”
The total value of DeFi is $ 98.68 billion, according to DeFi Llama, which is a significant amount when you consider the global crypto market cap of $ 1.5 trillion. At its all-time high, DeFi was valued at over $ 142 billion, but major market corrections have slowed it down. The DeFi boom came late last year and will remain, according to investors.
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