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Sergey Nazarov Describes The Small Leap To DeFi At Barclays Crypto & Blockchain Summit

At the Barclays Crypto & Blockchain Summit, Chainlink co-founder Sergey Nazarov virtually joined Barclays analyst Ramsey El-Assal to identify the fundamental questions banks should ask when preparing to offer users access to decentralized finance (DeFi). From Nazarov’s perspective, the journey to DeFi is already set in motion.

“This has already begun with custody,” he said. “Basically, when PayPal began offering the ability to get access to cryptocurrency that they essentially custody for people on a retail level – that, I think, was the thing that really created the proverbial shot in the air.”

PayPal’s move to custody crypto in October of 2020 was followed by a surge in DeFi’s TVL, which hit a then-record of $13.6 billion and kept climbing. As the industry’s leading oracle network securing the vast majority of DeFi, Chainlink secured $75 billion in smart contracts by the end of 2021.

This, Nazarov explained, is because once users have access to cryptocurrency, they inevitably want to put their digital assets to work in various DeFi protocols. Therefore, he said, the first question banks should ask themselves is, “Do you think that your clients will continue to want custody and access to cryptocurrencies?”

He continued, “If the answer is yes, well then there’s another very simple question of where do users go from there?” 

Nazarov’s answer is DeFi, which offers users up to 8% yield on the US dollar along with superior transparency and autonomy.  

“It will just come down to [banks] needing to service the requirements of customers and those requirements have already solidified around the demand for custody,” he said.

In other words: If cryptocurrency, then DeFi.

Nazarov believes that the biggest hurdle in the race toward DeFi has already been cleared, explaining that the move to offer custody is “much, much larger” than the conceptual move from offering custody to then offering access to DeFi.

“That’s a very, very small leap,” he said. “And I think that’s the small leap that is going to have a very big impact on what users and clients expect from their institutions and banking partners. And I think banks should get very prepared for that.” 

Watch Sergey Nazarov’s full conversation with Ramsey El-Assal at Barclays Crypto & Blockchain Summit.

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