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Sergey Nazarov Says Banks Should Move Fast To Adopt DeFi In Live Speech At Sibos

Today on Sibos TV, Chainlink Co-founder Sergey Nazarov spoke directly to a live audience of global finance executives, thought leaders and decision-makers at Sibos, the world’s premier financial services event organized by SWIFT. He explained how and why existing financial infrastructures should prepare to interface with smart contracts and blockchains now. 

He summed up three key factors driving demand for digital assets and DeFi.

  1. Users want access to cryptocurrency and digital currencies as an asset class with unique properties. 
  2. Once users have digital assets, they want to earn high returns through DeFi protocols.
  3. Blockchain’s inherent transparency offers an unprecedented level of control over risk management. 

He drew a compelling contrast between DeFi and existing centralized financial infrastructure. 

“You can actually see the full solvency of the protocol where your assets are. It’s as if a bank backend was completely open and viewable by all of its users on a second-by-second basis.” 

Nazarov was quick to note that DeFi’s superior yield and transparency is not a detriment but an asset to banks and financial institutions – as long as they move quickly enough to custody digital assets and offer users the ability to earn returns on those assets through DeFi.

“I think banks and financial institutions should view custody as the beginning of their journey with smart contracts and blockchains, not the beginning of the end,” he said. 

He believes banks will primarily compete to offer users the best access to DeFi in the near future. 

This will require financial institutions to allocate and train seperate teams dedicated to managing this new asset class and adopting DeFi products that provide the best yield. 

One of the biggest factors limiting financial institutions from adopting DeFi is the ability to interact with many different counterparties on many different blockchains. Nazarov said this is a problem Chainlink’s secure middleware solves.

Chainlink allows global banks and financial institutions to securely integrate with hundreds of different blockchains while maintaining their existing systems and resources, such as their backend, APIs and messaging systems.

“I think the big limiting factor is secure integration, which is what we spend a lot of time and a lot of late nights working on,” Nazarov said. “The only other factor is the speed at which banks form these teams and speed up in their adoption of this technology, which I think is now actually going to be driven much more by user demand.”

Watch Sergey Nazarov’s full interview on Sibos TV.

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