Investors need to acquire the requisite knowledge and gain a deep understanding of the DeFi market. Likewise, the market should be easily accessible to retail investors to take full advantage of the inherent opportunities lying in the DeFi sector. Individuals and institutions are now losing interest in the traditional financial markets.
The reason is not far-fetched: new investment alternatives are propping up now and then, while DeFi is becoming increasingly popular among both retail and institutional investors. However, the new alternative markets come with their potential risks.
DeFi Now Serves as an Alternative to Traditional Finance
Apart from the above drawback of centralized finance, the hindrance and lack of freedom in the sector also worry customers. For instance, banks are always faced with new charges which result from their malfeasance in their dealings with customers. Some persons may sue a bank for opening an account for them without their consent. Others may charge banks for using different names for the same product and presenting it to customers as different products. Banks may also be faced with money laundering cases, and so more.
In spite of the above and other challenges customers face from their banks, most customers maintain loyalty with their banks, insurance companies, and respective financial institutions. There seemed to be no viable alternatives to challenge the traditional financial system then. But now, decentralized finance has come to fill the gap. Contrary to what applies to conventional finance that comes with high charges, unfair terms and conditions, and many consumers’ inability to get financial inclusion. DeFi has come to make financial products and services available to all and sundry anywhere, anytime.
The Need to Educate Investors on Defi
Although DeFi is now seen as a viable alternative to the conventional financial system, there is room for improvement. Right now, DeFi focuses on users that are equipped with adequate knowledge of the blockchain and crypto industry. Indeed, there seems to be no clear clue about how to take advantage of this advantage. Virtually all guides presume that readers have a comprehensive knowledge of the crypto market. Educating Investors Should be the Priority. New retail investors and institutions who wish to enter into the DeFi sector must equip themselves with detailed education. There have not been sufficient educational platforms that teach starters the basics of DeFi. There is a need for published materials that provide useful content on DeFi.
Educational platforms should also make it easy for aspiring investors to learn about decentralized finance, the crypto industry, and the market fundamentals. The DeFi industry must persuade people to join the industry, even starting from as low as $1 per participant. People need to be educated and convinced more about the crypto market in general and DeFi in particular.
For several decades, investors have tried various investment alternatives that they could see in the financial markets. Some of the other options include earning from interest on a savings account. The situations have changed because some banks even make their customers pay negative interest, which is an exploitative practice.