The South Korean Ministry of Science and NCT published a research paper on DeFi today making it the first government-led DeFi research. The local report reads:
“The Ministry of Science and ICT and the Korea Internet & Security Agency published the “Blockchain-based innovative financial ecosystem research paper” on January 29. This is the world’s first government-led DeFi research paper.”
South Korea's government (Ministry of Science and NCT) published a research paper on DeFi.
This is the first government-led DeFi research.
— Joseph Young (@iamjosephyoung) January 30, 2021
Decentralized Finance or Defi has emerged as one of the better use cases of blockchain in the financial sector. Defi has eased the process of getting loans using crypto as collateral as well as staking. Starting 2020 with just under $1 billion in market cap, the growing demand for defi tokens has helped the defi ecosystem become a $45 billion market of its own.
South Korea is seen as one of the leading blockchain and crypto-friendly nations because the government pushes for blockchain adoption in its financial as well as education sector. The acknowledgment by the government suggests that after bitcoin, defi which is built on top of Ethereum would see high adoption by institutions and governments alike.
DeFi On the Verge of Mainstream Adoption
The institutions have started to venture into the crypto space and a majority of them are currently focused on bitcoin, however, at the same time many more financial giants have also shared their interest in defi, seeing it as the future of banking.
Mark Cuban, the popular Shark Tank fame billionaire who has changed his stance on bitcoin a couple of times recently revealed he holds a huge position in AAVE, a popular defi token. Cuban was also seen on Twitter talking about defi to his millions of followers while concerning the recent GME short squeeze frenzy. He wrote,
Lets talk $GME shorts vs De-Fi. When someone shorts a stock that is already heavily shorted, they have to pay a fee to borrow that stock. In the case of $GME that fee has been hovering around 30% this week. Shorts have to pay (Price x .30)/360 per day. In DeFi thats a 30% APY.
— Mark Cuban (@mcuban) January 29, 2021
Defi ecosystem has also seen a slew of cyber attacks and rug pull scams drawing comparison to the 2017 ICO frenzy, however, the ecosystem has managed to surpass those shortcomings to build a multi-billion dollar market. 2021 could prove to be a breakout point for many defi projects as mainstream banks start incorporating it for digital finance.