Regulatory Issues: What DeFi business models are sustainable and economically secure given the different regulatory regimes worldwide
DeFi is here to stay and it certainly has the capacity to finance real-world assets. So far, however, DeFi has little to show in terms of doing any real-world good. Over-collateralized loan pools typically seen in DeFi do not help solve challenges such as financial inclusion, affordable public services and environmental sustainability.
It is not surprising, though, that DeFi has not yet made its mark in much of the real world. The field is still in its infancy, and the ease of use remains a challenge for non-crypto folks. Using DeFi carries significant risk for an individual who is unfamiliar with how it works. And even for those who understand the risks, it can still be a tricky affair given the volatility of many tokens. If you borrow tokens from a loan pool, for instance, regular monitoring of the market is needed to ensure that there is always sufficient collateral against the loan. Failure can result in the loan pool being liquidated and the borrower losing their collateral.