Stani Kulechov, founder of the decentralized finance (DeFi) protocol Aave, highlighted several issues in the DeFi space at the StarkWare 2023 Session, held at the Cameri Theater in Tel Aviv, Israel.
In a fireside chat titled “DeFi: Resilience in the Face of Global Uncertainty,” Kulechov and Cointelegraph managing editor Alex Cohen discussed a variety of topics, including the risks of DeFi compared to traditional finance (TradFi) and how stablecoins can lead to more DeFi adoption.
According to Kulechov, the accuracy of risk calculation in DeFi is better compared to TradFi products, and this can drive more adoption for the space. The founder of Aave explained that this means that operations in DeFi will be cheaper than TradFi because risks are easier to identify. He said:
“You have all this visibility, you can calculate the risks more precisely which means you’re operating in an environment that should be cheaper for you because the risks are better known.”
When asked about onboarding ordinary people who may not be “tech-savvy” into the DeFi space, Kulechov noted that stablecoins and payments could play an important role. According to Aave executives, building a “payment layer,” which includes stablecoins, could potentially hook ordinary people into the space, eventually introducing them to DeFi.
“It’s more about building that payment layer, and then the whole DeFi loop starts to close because you have a way to easily exchange value,” he said. In addition, Kulechov also said that pushing the innovation curve further can eliminate adoption.
Despite that, Aave executives also noted that there are some issues in the stablecoins space. It includes value in the ecosystem and supports decentralized stablecoins. Kulechov explained that:
“The problem right now is that there’s not enough value in the ecosystem that you just have less support in decentralized stablecoins compared to centralized ones. And, I think that’s a big problem right now.
The founder of Aave added that the stablecoins he described as “the most resistant” are those that are overcollateralized.
related: DeFi happy start in 2023: DappRadar report
When asked about DeFi becoming more of a buzzword in the future, the founder of the Aave protocol expressed his belief in the long-standing space. He said:
“DeFi will be around for a long time because it solves one of the first problems that blockchain has solved. And, it’s the infrastructure that will be used in many applications.
The founder highlighted that there are many new innovations in the space, even finding ways for non-financial applications.