Cathie Wood: DeFi Is A Real Threat To Financial Institutions

According to Cathie Wood, ARK Invest founder and CEO, decentralized finance (DeFi) could already be a threat to traditional financial institutions.

Wood spoke with Miami Herbert Business School, and made comments on the DeFi sector’s possible impact on traditional finance.

“The financial revolution is DeFi and really, it’s just taking all the middlemen out of the financial ecosystem. A real threat to all of us… We know that the combination of digital wallets and DeFi is going to hollow out a lot of financial institutions. It may already be because a lot of lending and saving is taking place on DeFi because it offers lower loan rates and higher saving rates, so that’s a compelling combination.” 

DeFi is “scaling enormously” and has already had several resilience tests during past market developments, Wood noted, adding that DeFi users leveraging Bitcoin (BTC) and Ethereum (ETH) during recent market stumbles present evidence that the DeFi ecosystem is still doing well.

“May of 2021, we had Bitcoin cut in half, Ether cut by more than half. I was waiting for the leverage in the DeFi system to topple it, and it didn’t. And whatever doesn’t kill [the DeFi networks] is making them stronger.”