Ethereum stands to benefit greatly from DeFi "eating" traditional finance: analysts

There are many hacks of DeFi applications, like when a hacker recently drained $25 million worth of Ethereum and other crypto assets from a decentralized lending platform called dForce.

Despite these barriers to entry, a prominent investor believes it is only a matter of time before DeFi "Eats" finance.

Investor explains why DeFi will "Eat" traditional finance.

DeFi threatens traditional finance due to the benefits of accessibility and liquidity, "Active" DeFi investor and Ethereum proponent Arthur Cheong wrote in a recent edition of Camilla Russo's The Defiant newsletter/publication.

Cheong explained that with the introduction of trustless and permissionless systems with Bitcoin and its derivatives, DeFi immediately one-ups traditional banks because it "Can provide universal access to financial services." This industry, as a result, can and will provide "Much better products and services at scale than traditional finance," he added.

The investor added that with the high-interest rates offered by applications like Aave and Compound, coupled the low interest rates offered by traditional banks, the DeFi bull case is bolstered even further.

Many blockchains have their own role in DeFi - Tron has JUST, Bancor operates on EOS, and even Bitcoin acts as a transaction medium for crypto exchange and financial services company Abra.

By and large, DeFi is an Ethereum-centric trend, with the blockchain hosting an $800+ million DeFi ecosystem by some estimates.

That means that should DeFi continue to grow, Ethereum - and ETH the cryptocurrency especially - stands to benefit.

"4 million Dai was just minted with WBTC in a single transaction. This really showcases the latent demand for non-ETH assets, and it's the beginning of a broader trend of DeFi acting as an economic vacuum that will eventually attract almost all value to the Ethereum blockchain."