Why DeFi could be an $800 billion industry next year, according to a crypto expert

• Decentralized finance is poised to explode 10-fold, according to veteran crypto investor Matthew Roszak.
• Roszak, who Forbes says is worth some $1.5 billion, thinks mainstream crypto adoption, a global chase for yield, and elevated inflation are all boosting DeFi's profile.
• The biggest question is whether the sector can indeed maintain today's breakneck growth.

Decentralized finance has grown to an $80 billion industry in 2021 and is poised to explode 10-fold, according to veteran crypto investor Matthew Roszak.

"Right now we're sitting at a DeFi market cap of about $80 billion. My sense is that a year from now it will add a zero," Roszak, co-founder of the DeFi platform Vesper, told Insider.

Roszak, who Forbes says is worth some $1.5 billion, thinks that a "perfect storm" is underway for DeFi. Mainstream crypto adoption, a global chase for yield, and elevated inflation are all boosting DeFi's profile as billions pour into the industry.

On current trends, 10-fold growth in DeFi by 2022 would be attainable. So far this year, assets committed to DeFi projects grew 385%, according to DeFi Pulse. At that pace, total assets would break $800 billion near the end of next year.

Still, a fast-growing industry is not necessarily a big one. Or as Roszak put it: "$80 billion is still a rounding error for finance."

The biggest question is whether the sector can indeed maintain today's breakneck growth. A recent DeFi dip has meant that assets today are still below May levels.

Moreover, much of DeFi's expansion has come from investors chasing massive yields, sometimes in the double digits, available on platforms like Compound and Aave, which often offer incentive tokens to inflate yields and attract users. This sort of practice should "normalize" as the sector grows, said Roszak.

"There is a cost on these platforms to drive adoption," he said. "That is stimulating greater yields in order to acquire customers."

Roszak thinks that the government's relationship with DeFi will be essential to the industry's continued growth. In 2020, he joined a political action committee that tried to give $50 of crypto money to each member of Congress.

For those on Capitol Hill, he frames the issue with respect to crypto-skeptical China - as a possible area of strategic advantage for America.

"This country has an incredible 1990s internet level advantage," said Roszak. "Seeing China [crack down on crypto] is like a trillion-dollar gift today that they've just handed over."