Why did the Hillstone Project start? (6)

Continuing from the last time, this time I’m going to look at the drawbacks of DeFi.Current decentralized finance has great significance in terms of innovation through decentralizing the established financial industry, but there are some limitations.

1.First, attempts in the investment finance industry, one of the largest sectors in the financial industry, are difficult. Securities transactions are a sensitive issue in many countries, as multiple rights and obligations arise between issuers, receivers and holders, and these rights and obligations become available to many people. Thus, many legal restrictions are imposed on the transaction of securities, so securitization tokens that are relatively outside the legal limit have significant legal risks. Since many investors are reluctant to take large legal risks, topics such as international revenue securities in decentralized financing are handled very carefully.

2. The second limit is that so far there have been fewer decentralized financial projects that give investors a strong investment factor. There were also projects that provided strong investment factors, but many decentralized financial projects attracted existing cryptocurrency holders or provided people outside the cryptocurrency industry with a substitute for existing financial institutions. This is because decentralized financial projects contributed a lot to the system itself and relatively little to the creation of exclusive investment products.

3. Finally, the possibility of controlling the amount of distribution, a supply between demand and supply that determines the value of money, is one of DeFi’s biggest attractions, but failure to control the amount of interest or distribution can adversely affect price defense.

The reason for the failed DeFi project is that it is thoughtless and absurdly high interest rates and the absence of external capital inflows. Eventually, the company should create a model that does not fall in price even if DeFi coins continue to be distributed in the market with interest. Considering these problems, the Hillstone DeFi project concludes that the DeFi system should be designed to ensure that external funds continue to flow into the DeFi products through specialized investment funds in the traditional financial industry.

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