“DeFi will replace institutions entirely,” says Mike Belshe, CEO of BitGo

Mike Belshe, CEO and co-founder of BitGo, explains how decentralized finance will disrupt traditional finance with use cases like than automated market makers. Interview

The global decentralized finance (DeFi) market size was valued at $11.78 billion in 2021. This number is expected to increase as DeFi progresses, but it is still in its infancy. Therefore, a number of traditional banks and financial institutions still tend to overlook the potential of DeFi.

While this may be the case, experts in the crypto industry predict that decentralized finance will overtake traditional financial institutions in the coming years. For example, Mike Belshe, CEO and co-founder of BitGo – a digital asset custodial provider – told Cointelegraph that he believes DeFi will replace institutions within the next three to four years. Belshe elaborated on this point during an exclusive interview conducted at Activate, which was BitGo's developer conference that took place in Mountain View, California on October 25, 2022.

Cointelegraph: Why do you think DeFi will replace institutions?

Mike Belshe: I think DeFi will replace the institutions based on innovative use cases that we're starting to see today. For example, automated market makers, or AMMs, have a high potential for disruption.

While market makers have played a vital role in keeping markets and exchanges running smoothly, fast-moving markets like crypto can make it difficult for individuals to determine asset prices. This also tends to be the case with traditional markets, like stocks and commodities. For example, if a market crashes, market makers may think the assets need to be sold, but that could drive prices down even further. Market makers also tend to halt trades during periods of volatility, which can be harmful...