In a recent research report, investment management firm Bernstein has predicted that the future of finance is headed towards a bank-free, decentralized ecosystem powered by blockchain technology.
The report suggests that banks will still exist, but will only act as “custodians of old wealth,” while new wealth creation and financial services innovation will shift to a new financial app universe on the Ethereum ecosystem.
Gautam Chhugani and Manas Agrawal, the authors of a recent report by Bernstein, suggest that a resurgence in decentralized finance (DeFi) is currently taking place. DeFi encompasses various financial activities conducted on a blockchain
Bernstein estimates that by 2028, bank-free DeFi will generate USD 40 billion in revenue and have total assets of USD 1 trillion, up from USD 65 billion currently. The report forecasts USD 5 trillion in assets over the next decade due to rapid adoption.
The next generation of DeFi will be built on a layer 2 that is scalable with 95% lower transaction costs and products that generate real revenue and sustainable yields rather than being driven by token incentives, the note said. Layer 2 refers to separate blockchains built on top of layer 1 chains that reduce bottlenecks with scaling and data. Layer 1 is the base layer or the underlying infrastructure of a blockchain.
