# Why DeFi is inevitable - Tobias van Amstel | Altitude.fi - Channel: [ETH Belgrade Community](https://streameth.org/eth-belgrade-community) - Date: 2025-10-07 - Duration: 13:25 - Watch: https://streameth.org/watch/yt-vgI11tIJKks - YouTube: https://www.youtube.com/watch?v=vgI11tIJKks ## Description Why DeFi is inevitable - Tobias van Amstel | Altitude.fi ## Transcript All right. Um, I want to start today with a question. What if all financial assets will move onchain? Um, I'm talking all traditional all valuable assets in in Trafi. Um, that means we're still really really early. Um, and today I'll talk you through why I think that's the case. Um, so this is where we currently are. Um the value in DeFi is represented by the small green uh dot. It's about 120 billion. The three u blue squares represent the current assets in the financial system. The stock market, the the bond market and the bank deposits. So if you look at and so in total that's about 300 trillion which means that uh with the current value in DeFi about 120 billion uh current traditional financial assets three over 300 trillion that's a 3,000x opportunity or a 300,000% growth. Um why do I think all financial assets will come on chain? Simply because DeFi is better than Trefy. Um if you look at these four uh features um first of all access um in DeFi you don't need a bank account and you don't need anybody's permission. All you need is internet access and a wallet and you can um you can be active in DeFi. Then there's transparency. In DeFi everything is verifiable on chain and uh in Trefy you rely on reporting that's pretty much outdated the moment the report is published. Um minimum investment in Trefi it's very normal to have a minimum investment size of 25k 50k 100k um in defi you can get started with a few dollars and then uh last interoperability in trefy everything is siloed meaning that financial assets sit with different banks and different brokers um in defi everything flows seamlessly on chain between protocols now let's look at an example um collateralized lending collateralized lending Lending is when you borrow against a uh against a valuable asset, for example, a car loan or a mortgage. Um you the the bank offers you a loan and in return you pledge your collateral like your car or your house. So if you don't uh pay your loan back, the bank can sell your house to satisfy the loan. Now that doesn't only work for cars and for houses. It also works for financial assets like a stock portfolio or a bond portfolio. Uh you can do that in traditional finance. Um but usually you need to be a high net worth individual or a fund or another institution. It's a very complicated process. Um and uh everything is siloed meaning that if you have stocks and bonds across multiple brokers, you can't just move them between platforms to keep your overall position healthy. Um but compare that to DeFi where uh you don't need any anybody's permission. All you need is your asset and you can deposit it into a lending protocol. You can take your loan out and then you're done. Um, and if you want to move assets between lending protocols, it's a click of a button to keep your entire portfolio healthy. So, let's look at the current state of DeFi lending. Um, there's over in the in the top seven protocols on the Ethereum blockchain, there's about 56 billion in deposits. twothirds of that sits in a so I think it's uh fair to say that uh collateralized lending has found product market fit in DeFi. Now um there's still a lot of room for improvement within collateralized lending. There's for example the efficiency dilemma. Um when you borrow against your asset you you can as a user you can decide how much you want to borrow. If you uh borrow pretty pretty if you borrow a lot against the value of your asset then uh you run the risk of liquidation meaning that if your the the value of your loan approaches the value of your collateral then uh the protocol can sell off your asset to satisfy your loan. Um, so if you don't want to get liquidated, then you take a loan with a low loan to value, meaning a small loan, and you lock up a lot of capital, but that means it's capital inefficient because you you're locking up a lot of capital to take out a small loan. Um, that's why we've built Altitude. So, Altitude solves that dilemma. Um, in the in the top bar, you can see a loan that the user has taken without altitude. um they've taken a conservative loan, a small amount, a small loan against their their assets. Um and um uh but that means that there's a lot of idle capital. So at altitude, we activate part of that idle capital. We generate yield with that uh uh with that activated capital and that yield flows back to the user. Now, if DeFi is so great, um why hasn't DI taken over yet? Um well, let's be honest. DeFi is not uh is not a particularly safe environment for investors. Um retail investors have lost a lot of money over the last few years. And look at for example what happened when ter with the Teraluna collapse with the Celsius bankruptcy, the FTX bankruptcy. Um what happens is uh people lose a lot of money. They lose confidence. Uh they take their money out of the ecosystem. They take their money offchain. Um and regulators uh get very active. Now, we've been lucky that the new uh US administration has been very crypto friendly. Um, but if we see a few more big hacks or exploits or scams, then that tide could easily turn. Um, so how do we accelerate uh adoption in DeFi? Um, first of all, it's very important that we don't lose people's funds and we don't screw users because if people if you make people lose money, um, they lose their conf they lose their confidence very quickly and they'll just move offchain again. Um, and we have to simp simplify the UX. Most D5 products are pretty complicated to use. Um, and um um when when when when it's when it's too hard to use, people will just lose interest and move on. So if we want to bring the next 100 million people into DeFi, those next 100 million people, they are not coming into DeFi because they like playing with DeFi. They come to DeFi to solve a need. So it needs to be easy for them to interact. Um so let's build protocols that people love uh and and trust. So how do we do that? Uh we do that by making sure that protocols are secure by default by prioritizing security. Um we uh can create trust quickly by being completely transparent what we do with the assets. Um and by creating UX that's not just for deens but that our parents and our grandparents can use. Um that's it for me. happy to answer any questions. >> Okay, big applause. Thank you. Um, let's start with that Q&A session. So, if you have a question, raise your hand. >> Okay. Do you believe DA defa in inevitable? >> Raise your hand. Woo. Yeah. Okay. At least half of the room. >> That's good. To the other half of the room, I would say, why not? Why do you what do you think the the obstacles are? What do you think? Why do you think DeFi is not better than Chhatfi? >> Uh do you want to elaborate on that with the microphone or >> just you know for enterprise to put >> like clients money into DeFi? Uh the biggest question is custody because currently don't even know if Coinbase and whoever there are are they really responsible for all the ETF assets by their book which I think they don't and just you know try to come into any bank who is used to you know have a reliance or whatever someone to blame for for any faults just tell them to go put money into DeFi and whatever happens to private keys or whatever like multisk when employees are retired or just being changed. So lots of attack vectors and they'll be just you know looking at a huge uh you know balance sheet uh issue. So >> yeah. Yeah. I mean custody custody is an issue if you if you're if you're responsible for your private key and if you lose your private key and you can't access your assets there's not there's no bank manager that you can call. So totally agree. Yeah. >> Um but at the same time, what do you think about kind of multisc setups where you can spread you can have multiple private keys that allow people to together kind of manage funds? >> Yeah, but you know again put yourself in a uh like bank chair, right? And you have say five out of seven multisc and you have seven employees uh part of which are like not that you know security aware part of which can just leave you. Yeah. And part of which can just you know uh become go wrong. Right. And how do you manage that? >> Yeah. Yeah. Fair. Fair. Um I think first of all if someone's not security aware I don't think they should be signer of a multisc. Um so >> but he's like a chairman of the board for example. He's like 75 80 years old. He should be probably uh but you know he just not. >> Yeah. Yeah. Yeah. I I think just because someone has authority doesn't mean they should have a private key. Um so maybe there's a different way how that person can dedicate his authority to someone that is more security aware. >> Sure. Sure. Sure. But you know again I think banks are not ready. Regulation for that are not ready. Just it it creates a lot of you know so so many people to point to inside the bank. So it becomes nobody's lent nobody's responsibility. Just no bank wants that. >> Yeah. Yeah. Yeah. Yeah. Yeah. I mean, custody is an issue. Um I think I think there are a lot of custody solutions where people that really can't handle or or where people don't want to take that responsibility or uh prefers Yeah. prefer someone else to have that responsibility. You could let someone else manage those funds. Um I think um I don't think the future is that everybody always interacts directly with the blockchain. I think a lot of the complexities can be and should be abstracted away. So I think the general user um shouldn't have to worry about private keys. >> But I think >> true true I just I can remind you about like the bybit hack which happened recently and it happened by a supply chain attack and so it was good like because it was recovered. Oh no made made wall, right? Not recovered with, you know. >> Yeah. Yeah. Yeah. That was an unfortunate attack where the where the user interface was compromised and people thought they were doing the right thing, but um they signed >> but it was like a bunch of security aware professional people used to do that and still they were compromised. >> Yeah. Yeah. Yeah. Yeah. That's it's a it's a tough Yeah. the the custody is a is a tough space. I do think with every incident we learn more. So I think that's also the reason why not everything has moved on chain yet. There's still a lot of issues to work through. Um but yeah, those are definitely some of the downsides. Um I do think that eventually all assets can be onchain. how they are managed. It might be that that uh um only a small group of people can actually interact directly with the blockchain and a lot of the complexities are abstracted away and then the responsibility of managing everything then lays with those people. Um so I don't think self-custody in itself is is the be all and end all. I do think transparency and interoperability um kind of make up for some of the um dangers in self- custody. True. True. We're just getting back to thread fire rails in in a sense, right? >> I mean we have to trust you know some group of individuals to do that for us. >> I think it could be tr on the top and kind of defi in the bottom. So defy res. Agreed. We got there in the end. Okay. Any more questions or opinions? If not, then let's end it with an applause.