Morgan Stanley predicts DeFi will remain 'fairly small' as growth will slow

cnbctv18.com:

Over the last year, the total value locked (TVL) in decentralised finance (DeFi) projects has risen from $62.23 billion to $213.13 billion, according to Defi Llama data. That represents a 242.5 percent growth in just one year.TVL is the sum of all deposits made in cryptocurrency in DeFi services like staking, lending, and borrowing, liquidity pools, etc.

The numbers indicate an exploding interest in the segment from users and organisations alike.However, one of the largest investment banks in the world, Morgan Stanley, doesn’t believe that the growth will continue in the future and that the DeFi industry will remain “fairly small”. It published a report stating that regulation and excessive collateralisation are the two factors weighing the DeFi space down.Also Read:What is Fantom; how is it a threat to Ethereum?According to analysts from Morgan Stanley, DeFi only benefits protocol providers and not the end-users themselves.

Also, since decentralisation promotes autonomy in transactions, DeFi systems are vulnerable to cyberattacks and hacks. The analysts, therefore, believe that traditional financial systems are still more efficient than the new decentralised systems."Rather, DeFi protocols often seem to us as a way to attract cash flow to enrich the protocol operators,” the report read.