DeFi’s popularity and innovation could be a significant concern to traditional banking and financial institutions that rely on outdated technology. If the last two years have taught us anything, people who are reluctant to accept change will be left behind. In the wake of the COVID-19 pandemic, businesses that adapted survived, and in some cases, even thrived, while others struggled and often couldn’t cope.
The financial world will be no different. Blockchain technology, which has made Decentralised Finance possible, is only a few years old but has risen in popularity thanks to its innovation and potential to generate huge profit yields. Now, governments and corporations worldwide are investigating ways to incorporate blockchain, fearing that they will be at a significant disadvantage if they don’t.
The financial world should be concerned about DeFi because it could really disrupt the status quo and bring more power and wealth to the public. According to the billionaire investor and owner of the Dallas Mavericks basketball team, Mark Cuban, if banks aren’t worried, they should be.
ASTRA will ensure that investors aren’t stung unexpectedly
As one of the world’s most well-known investors and crypto enthusiasts, Mark Cuban is well-positioned to comment, “Aave is a completely automated, permissionless platform, where there are no bankers, no buildings, no toasters, no vaults, no cash, no holding your money, no forms to fill out, no credit ratings involved.” In short, Aave is very different to a bank but provides a massive opportunity for investors to make a lot of money.
However, this means that people can get stung by investing in things they don’t fully understand or by smart contracts that have hidden traps in them. Mark goes on to say that “This stuff [DeFi Projects] is uber-complex and a lot can go wrong.” Somewhat ironically, the high-profile entrepreneur was himself caught out just a few days after making these statements.
Cuban was a significant investor in Iron Finance’s Titan coin, which dropped in value from around $60 to just above zero within a few hours, meaning Cuban lost a lot of money in a short space of time. He blames himself for not doing the required research but admits he cannot tell if something more sinister happened. The team behind the Titan token have said the crash came as several big investors rushed to sell the token quickly. Still, others have suggested it could have come as the result of a “rug pull”, where investors’ money was taken out without them knowing.
In either case, this crash demonstrates just how risky DeFi projects and crypto investment can be. Even wealthy, high-profile and knowledgeable individuals with many advisors can still be caught out. The decentralised legal layer provided by ASTRA will ensure that investors aren’t stung unexpectedly. We want to establish trust for all DeFi projects by ensuring that the smart contracts that govern the transactions are secure. Regardless of how much you are investing, you can be sure that your transaction is protected against fraud, scams and malicious actors. ASTRA reduces the risk associated with DeFi projects and brings confidence to your investment.