Ethereum potentially is emerging as crypto’s future regent as decentralised finance (DeFi) turns the traditional banking system on its head.
Standard Chartered, a big-hitter in the Financial System Benchmark, has projected that tokenised real-world assets could increase from $US35 billion in 2025 to a staggering $3 trillion by 2028.
Notably, this excludes stablecoins, or digital currency designed to maintain a stable value.
The bank forecasts that listed equities and money-market funds will each represent R750 billion of the $2 trillion.
Ethereum already dominates the DeFi space by accounting for more than 55% of the Total Value Locked.
As DeFi gains an even firmer foothold, the percentage is predicted to become even higher.
Standard Chartered is by no means the only financial institution foretelling of DeFi’s rise.
Deutsche Bank CEO Paul Maley says it is necessary for any bank that wants to remain competitive to ensure they have “an ability to interact and interoperate with DeFi systems as they emerge”.
The DeFi model aims to remove the need for reliance on third parties like banks or insurers, thereby making transactions more accessible to more people.
Instead, security and reliability are established via computer protocols that are decentralised, unbending and unforgeable.
One of the major pluses of this system is that interest rates are reduced for borrowers because of the absence of a traditionally-trusted third party such as a bank.
Ethereum is touted as being the dominant force in the DeFi space because of its outstanding history and reputation for stability.
After more than a decade it sits only behind bitcoin as the world’s biggest cryptocurrency, with the ETH to USD price extremely favourable even in bear markets.
During this period, it has not suffered a single mainnet outage – an astonishing achievement that inevitably catches the eye of investors.
The positive sentiment around Ethereum lies in its smart contract functionality.
With a smart contract, the terms of an agreement are written into lines of code.
This technology instantly allows transactions to be facilitated and verified, paving the way for different types of financial services to be offered.
These include lending/ borrowing, trading and insuring, among others.
Aside from the fact that more people can participate in such financial transactions, Ethereum offers developers a platform to innovate.
A good example is Uniswap.
Thanks to this decentralised exchange, ETH tokens can be traded directly from users’ wallets.
It completely bypasses the need for a central exchange.
While central exchanges do carry advantages, there are negatives too.
Among them is that investors need to trust the central company to safeguard their crypto, and the exchange makes the decision on which cryptocurrencies to list.
Another significant bane is that centralised exchanges can freeze investors’ accounts.
Given all the above, it is not hard to see why analysts are already viewing Ethereum as the “backbone” of a future system that is on track to be accepted by billions of people around the world.
With upgrades and improvements constantly driving the blockchain to greater heights, it is future prosperity that is Ethereum’s to lose.
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