One expert in the field says that decentralization is important if crypto capital markets are ever going to be made official.
The idea behind capital markets is that those who supply and those who seek capital can meet and conduct transactions efficiently with one another. Those who have money to invest or save, like banks, connect with those who need money, including enterprises, governments, and individuals.
Financial products based on cryptocurrencies are being developed by VegaX Holdings. It has a staking option on its VegaX DeFi platform and a Cosmos-based DeFi ecosystem called Konstellation.
Lee thinks decentralization is the most crucial factor that will push cryptocurrencies into the financial mainstream. In decentralized systems, middlemen are taken out of the decision-making and transaction-processing chains, saving significant sums of money.
Using an intermediary makes fees and the amount of time it takes to make an investment go up, which could lower returns. Getting rid of them through decentralization could make markets more efficient and boost returns for investors.
Lee also opines that stablecoins are crucial to the development of crypto’s capital markets. He thinks that because most stablecoins like Tether and Dai are still denominated in United States dollars, they have the most potential to leapfrog other digital assets and even fiat currency.
Stablecoins, he underlined, provide investors with a globally accepted currency unit. Also, everyone will use stablecoins because they provide stability, which is especially important when the markets are unstable.
Circle’s USD Coin, the world’s second-largest stablecoin by market cap, has already begun its push into the capital markets with the help of its new partner BlackRock.
According to Lee, the traditional financial world will be the source of the flow of money, people, and things into the blockchain rather than the other way around.
But he thinks “DeFi and crypto markets need to have a lot more efficiency” to help the pace of adoption rise along with the development of the technology. In his opinion, the “unusable” systems that aim to help crypto newbies bring in the capital are a major source of inefficiency.
This view is consistent with a Cointelegraph analysis published on April 12, which argues that resistance from the traditional financial sector to the use of cryptocurrency is becoming a pointless waste of time.
Vitalik Buterin expressed concern about the use of token bridges at the beginning of the year, which are necessary for bringing new use cases to the blockchain and the world of cryptocurrencies. There have been multiple security breaches in 2022, costing them close to a billion dollars.