WEB 3.0 AND THE FUTURE OF DECENTRALIZED FINANCE (DEFI) | by Hub of Influencers | Aug, 2023

The world is changing at such a fast pace, and we’re here to keep you in the loop!

Finance is an industry that is now being revolutionized with the introduction of Web 3.0. Decentralizing the structure of the web, Web 3.0 will impact the growth of DeFi as well.

Web 3.0 & DeFi are going to guide many financial assets in the upcoming years and this is the reason we should be delving deep into its workings. This system is taking a huge leap in becoming transparent and reducing the risks. With Web 3.0’s growth, it’s not easy to determine its effects on many industries.

Finance as an industry is most often affected in case of every change, and we’re here to decode it.

Built on blockchain technology, DeFi is a system where financial transactions are transparent. Distributed between different channels & intermediaries, this DeFi system is not under the control of a central server. This makes it an authenticated & transparent channel for peer-to-peer transactions. The system comprises lending & borrowing platforms and exchanging & prediction algorithms that operate through different applications. Bound by a smart contract (self-executing), DeFi is the finance of the future.

Web 3.0’s growth adds truth to the fact that all content creators are getting all the power they need to own their intellectual property. Social media marketing experts are calling this advancement a much-needed one.

The financial sector is not only a very crucial one, but since the web has evolved, it has given space for the spawning of crypto currencies. It has Accommodated & created a new concept space altogether. User interactivity has scaled since the introduction of the Web. 3.0.

There are several ways in which Web 3.0 is shaping the future of finance. Disrupting traditional finance practices, it has taken the markets and the world by storm.

– Removing the middleman- Since the system is decentralized; every intermediary has been removed, giving power to transactions for being much for efficient. The parties can directly be involved, and save resources. Traditional banking in this sense works as a middleman and charges unnecessary amounts.

– Transparency- Involvement of both parties in a direct manner constitutes a transparent transaction. Since it is an open platform, one can go through the code to observe its workings, reducing the chances of fraud and corruption by a third party. This function is not a core part of traditional banking that result in many cases of fraud coming to the limelight.

– Accessibility- Traditional banking is not a luxury in many established places. With the presence of the internet & introduction of Web 3.0, this problem is no longer a concern. Since anybody can access the internet, these banking services automatically become accessible to them without any excess fee.

The growth of blockchain has been very rapid, and Decentralized Finance has been catching up with it at a matched pace. The TVL (Total Value Locked) of crypto in the DeFi systems amounts to about 43 billion dollars as of December 2022. This value comprises all currency that fits the code of lending, borrowing & liquidity pools.

Every new change brings a set of questions with it that resolve over time. At the present moment, some pressing concerns about the workings and contracts binding the DeFi systems pertain. Some of these are-

– Will governmental control take a backseat to any Web 3.0 institutions due to decentralization?

– Does the internet fall out as an entity from governmental control?

– Will Web 3.0 & DeFi jeopardize national security and related technologies?

– Can these technologies breach smart contracts and risk cyber security?

– Will these technologies be a potential threat to the state?

Many of these questions from different contexts are a running thread in the minds of many financial experts. Regulations are being made to control the extent of power that these platforms will hold in the long run.

Even with the introduction of this peer-to-peer banking system, traditional banking matters will be present in the long run due to its ever-present credibility and physical presence.

India as a country is largely in support of a cashless economy and is home to many FinTech unicorns like Zerodha and Phone Pay. The fast-evolving economy around the globe proves the growing popularity of DeFi in the upcoming years.

With the current growth rate, Web 3.0 will contribute about $1 trillion to India’s economy by 2031. According to many social media marketing experts, India is the second largest internet user in the world. With this power, we are to contribute 1.53 billion users by 2040 with a media-productive age of 35 years. Continuous user growth will give access to growing DeFi mechanics.

Assets have continuously been added to the DeFi platform since its rapid growth in 2020. Adding different functions and upgrading codes to its system has resulted in its rapid adoption. The power of DeFi lies in its potential to reduce intermediaries, lowering fees for transactions, and inclusion of banking powers for traditionally inaccessible communities.

Open-source systems can create communities that will further diversify the system and increase its potential in the long run. Since there is a limited crypto currency in the system, the buying and lending agenda can create a high level of income source for investors.

Decentralization represents an all-time division of power to various credible sources. Due to the presence of different multi-level barriers in an open-source system, it is not easy to breach. This gives it transparency & credibility. Although concerns about its presence as a source of threat to financial institutions still pertain, it is not wrong to say that it has only added to our power as a community to manage finance better.

Innovation in this sector is at an all-time high, and Web 3.0 has proven its efficiency to give power to creators. DeFi will grow and expand for the better, bringing new policies and financial power to the community.

To know more about the power of the financial world with the growth of Web 3.0, follow the Hub of Influencers!