# The future of DeFi By [Soul Hunter](https://paragraph.com/@soul-hunter) ยท 2024-12-12 --- he troika of finance is banking, brokerage and insurance. Some of the functions of these types of financial institutions have developed corresponding products in DeFi, and some are still missing. By disassembling these functions one by one, we can predict what room for development in DeFi in the future. A bank is an organization with the characteristics of centralized operation, and there is no real bank in DeFi. One of the main functions of banks is lending, and the corresponding product of DeFi is the lending pool. The Aave introduced before is the largest lending pool. Other lending pools include: MakerDAO, Compound and Anchor, etc. However, at present, the only unsecured lending products that can correspond to the credit intermediary function of banks are TrueFi and Wing. They are relatively small in scale and mainly target asset management companies that focus on Web 3.0. It is difficult to conduct credit evaluation of complex scenarios such as the real economy. Another major function of the bank is depositing, and the corresponding product of DeFi is the wallet. Since the native assets of Web 3.0 already exist in digital form, and the private key is also in the hands of everyone, there is no need for an institution to save and manage for people. The market-making and brokerage functions of brokers have been realized through automatic market-makers and liquidity providers, and people are also actively trying in investment banking and asset management functions. Ondo is a decentralized investment bank founded by two former Goldman Sachs employees. It gathers investable products on the chain and then repackages them into a variety of products through smart contracts according to risk-return, for investors with different preferences to choose from. Cult DAO is a decentralized venture capital, which exists in the form of DAO. The source of funds for Cult DAO is the transaction fees charged from all CULT ton transactions. Members of Cult DAO obtain the right to vote by holding the CULT ton, and the top 50 holders have the right to propose investment projects. The investment proposal can be issued after the investment proposal is voted by all members according to the proportion of holding totons. Mutual insurance of traditional finance itself has a certain concept of decentralization, so insurance is relatively easy to migrate from traditional finance to DeFi. At present, the insurance products in the field of DeFi include: Nexus Mutual, Unslashed, inSure, Solace, Bridge Mutual, etc. The difficulty of insurance lies in pricing and nuclear insurance. In terms of pricing, at present, these insurance products are mainly completed in a centralized way, such as with the help of the ability of actuaries. Moreover, because the insurance targets are all on-chain assets, the degree of quantification is high, and the pricing requirements are relatively simple. In terms of nuclear security, most of them adopt the voting method. The difference is that Nexus Mutual imitated the voting method of members of mutual insurance, while Unslashed entrusted nuclear insurance to Kleros, a decentralized protocol that resolves disputes on the chain with a jury mechanism. Compared with traditional finance, the current functions of DeFi are still very imperfect, and the number of products that can be compared with traditional financial functions is still very small, and there is a lot of room for development. On the one hand, this is subject to the development time of DeFi, and on the other hand, it is also subject to blockchain technology. The reason is that a very important element in the financial industry is KYC. In his paper "Decentralized Society: Finding Web3's Soul" published in May 2022, Vitalik mentioned that it is necessary to create a kind of human The deeply bound identity ton can truly restore the interpersonal relationships in the real world in the encrypted world, and at the same time, it can bind personal credit to this ton. The author believes that finance is a highly professional field. In the process of decentralization, it is necessary to retain a certain centralized mechanism. For example, centralize decision-making, and automate and decentralize execution. It relies on a few elites in the community in the credit process, and relies on the implementation of smart contracts in the supervision and control of the flow of funds to eliminate fraud in the implementation process. --- *Originally published on [Soul Hunter](https://paragraph.com/@soul-hunter/the-future-of-defi)*