Op-ed: The outlook for DeFi lending remains strong – The industry is mature and ripe for institutions

The following is a guest post from Robert Alcorn, co-founder and CEO of Clearpool.

As we enter the mid-point of 2023, the DeFi lending market continues to grow, observing a 20.5% increase in Total Value Locked (TVL). This reflects a shared consensus among traditional and crypto-native institutions that DeFi has the potential to solve the problems that led to systemic failures across the CeFi market in 2022.

Regulation, though presenting hurdles, is further propelling the evolution of DeFi. The emergence of sophisticated protocols is moving the nascent crypto credit market to a mature DeFi ecosystem. Growing regulatory scrutiny emphasizes the need for KYC and AML-compliant protocols to enable institutional DeFi adoption.

Resilient DeFi protocols, having withstood the tests of 2022, have emerged as critical pieces of market infrastructure. For the DeFi industry to continue growing, we must focus on attracting more institutional players and creating more sophisticated products.

Institutions assess the DeFi landscape

In assessing DeFi, crypto-native institutions are, of course, more familiar with the concepts. However, both traditional and crypto-native institutions share optimism for DeFi’s potential in building a more transparent and efficient financial market infrastructure.

Even with last year’s CeFi collapses, DeFi is seeing a gradual return to growth, albeit slower than in 2022.

Nevertheless, DeFi, and the broader digital asset market in general, continue to draw institutional attention. Notable examples include:

BlackRock’s June 2023 paperwork filing for a spot bitcoin (BTC) ETF.
Franklin Templeton’s launch of a crypto product that tokenizes U.S. government securities, cash, and repurchase agreements on Polygon in April 2023.
JPMorgan Chase’s continued commitment to tokenizing traditional financial assets through its Onyx digital assets platform, proce

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Author: Robert Alcorn

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