Tether CTO: Moving DeFi forward in Asia
Asia stands on the cusp of a global digital banking revolution spearheaded by DeFi, short for decentralized finance. DeFi refers to a more open and transparent financial system supported by blockchain technology. This includes smart contracts, protocols, decentralized applications, or DApps, and digital currencies, such as bitcoin and stablecoins like Tether.
Large parts of the region remain underbanked, while micro-businesses continue to lack access to credit. The cost of lending from traditional financial sources is rising, with traditional financial institutions continuing to overlook small and micro-businesses. There lies a major opportunity for the DeFi ecosystem to fill this void and meet the increasing demand for funds in developing countries across Asia.
DeFi’s potential to provide more inclusive access to financial services and credit, at a lower cost, has sparked growing interest among users in the region. While there are only a few DeFi projects in Asia so far, its strong growth potential will increase the need for a reliable payment medium for business settlements, transactions, bookkeeping and value storage.
Given the volatility of most cryptocurrencies, a stable digital currency with deep liquidity is vital to supporting this nascent alternative financial system. Tether, the world’s biggest stablecoin, is the undisputed market leader in this regard.
Tether has emerged as the stablecoin choice for the DeFi space
Not only is Tether the world’s biggest stablecoin by market capitalization, it is also seeing an increase in demand among Asian traders as an onramp to the crypto market. Amid today’s growing interest in DeFi, there has been a surge in demand for Tether.
The DeFi space has consistently looked to Tether for their projects. This has led several DeFi platforms adopting Tether organically for use in growing and scaling their projects. There are several reasons that could explain DeFi’s strong interest in Tether.
First, Tether’s centralized collateral of U.S. dollars provides a strong foundation for the DeFi ecosystem. DeFi can leverage its value from a more stable asset to properly diversify its risks. As a popular fiat gateway for institutional investors via OTC desks, Tether has been boosting liquidity across the DeFi space.
This has led to Tether emerging as the biggest and fastest-growing stablecoin money market in DeFi. Such liquidity and stability can only help to attract the institutional investment needed to drive the burgeoning DeFi movement forward in Asia.
Second, Tether’s availability on multiple blockchains makes it suitable for DeFi lending, given that DeFi lending takes place on different chains. Such chain agnosticism also reflects the strong interest and support that Tether has been receiving from several key blockchain communities.
One notable example is the Ethereum community, which has long been very supportive of Tether. This has led to a number of Ethereum DeFi projects wanting to adopt Tether for its transactions and settlements.
Third, Tether is one of the quickest means for moving money across the globe. Earlier this year, Tether was the first stablecoin to be integrated into the Algorand 2.0 blockchain, enabling faster settlements and reduced counterparty risk for traders’ fiat to digital asset transactions.
The next frontier for DeFi is Asia
Already, Vietnam is seeing an emergence of DeFi protocols. Singapore is launching digital banks next year, Cambodia will be launching a nationwide payment system on the blockchain, while China will launch its own sovereign digital currency, the Digital Currency Electronic Payment (DCEP).
Growing participation in DeFi, especially in Asia, needs to remain a priority for the blockchain industry. New ventures and innovation in this space need to continue to be supported and empowered. DeFi can only thrive with a stable digital currency.
As a trusted, innovative and pioneering stablecoin embraced by many in the blockchain space, Tether will continue to play a pivotal role in the DeFi movement for the foreseeable future.
This article is a guest submission from Paolo Ardoino, CTO of Tether and Bitfinex. The views and opinions expressed in this article are those of the contributor and do not necessarily reflect the view of Blockchain. News. Investors should be well aware of the volatility of cryptocurrencies and conduct their own research before making investment decisions.
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