Token 2049 Singapore
- Wall Street giants like BlackRock won’t have as much impact as fintechs, says Paul Frambot
- Major fintechs are forming important partnerships with DeFi players.
- There is an urgent need to reverse the decline of DeFi.
Forget BlackRock and other Wall Street giants. It’s fintech pioneers like Revolut and Robinhood that will breathe new life into DeFi.
At least that’s what one cryptocurrency founder believes.
“We basically need to build a financial infrastructure for the most tech-savvy players in finance,” said Paul Frambot, CEO and founder of lending protocol Morpho. DL News in an interview in Singapore on Monday.
“It’s very clear to me that this is the next step.”
“Artificial Casino”
Initially touted as a much more efficient and transparent financial system, DeFi has become an “artificial casino” where speculation generates returns, Frambot said as Token 2049 approaches.
Morpho, which raised $77 million from venture capital firms including a16z and Ribbit Capital, launched at the height of the 2021 hype cycle.
In a bid to outperform the most popular DeFi lending projects, Aave and Compound, Morpho launched Optimiser, a software layer that maximizes yields.
However, since the summer of 2021, total deposits invested in DeFi have dropped by 56%, according to data from DefiLlama. Fewer investors in DeFi means fewer developers and builders, and projects are having to compete for dwindling resources.
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“Aave vs. Maker, Maker vs. Ethena — everyone competing?”
— Paul Frambot, Morpho
“It’s becoming more competitive, that’s clear,” Frambot said.
“Aave versus Maker, Maker versus Ethena — everyone is competing.”
Major fintechs Revolut, Robinhood and eToro have each adopted crypto as a core part of their banking or brokerage offerings.
Frambot hopes he and others can boost DeFi’s appeal to mainstream users.
“The question is: how do we move from this artificial casino and startup phase to the broader message?” he said.
Fintechs are connecting
Over the past decade, digital banks like London-based Revolut have established a beachhead in the once-impregnable domain of traditional banks.
However, successfully processing payments is proving more difficult.
Fintechs must use the same outdated “rails” as banks, money transfer companies, asset managers and other financial players.
“They are connecting to traditional financial infrastructure, which has its limits. It is neither efficient, nor transparent, nor resilient,” Mr. Frambot said.
An opportunity
He said this is an opportunity for decentralized finance. And fintechs have understood this well.
They are already developing applications to connect to Web3, he said.
Robinhood has partnered with Arbitrum for a self-custody wallet.
He expects more fintechs to seek more DeFi partnerships in the coming months.
“They aggregate financial order flows and can now become owners of the financial infrastructure themselves,” he said.
“They are essentially freeing themselves from TradFi.”
Ben Weiss and Jo Wright are correspondents for DL News. Ben is reporting from TOKEN2049 this week.
