KuCoin Labs – the division focusing on investment and research of crypto exchange KuCoin – shared its prediction of DeFi still a major trend in crypto this year, and governance will operate via DAO. 

Specifically, as the DeFi ecosystem is still being negatively affected by criminal whales, the risks associated with financial damage in the industry are becoming more and more transparent. 

Due to this reason, requests for the proper regulations of DeFi reportedly started to surface last year, with the industry beginning to come across enforcement actions throughout the past year. 

With regulators paying close attention to DeFi, KuCoin Labs reportedly shared its predictions of the sector tapping DAO governance to bring down regulatory risks. 

“If DeFi aims to reduce regulatory risk, the form of DeFi governance will gradually become a DAO.”

Per KuCoin Labs, a DAO that prioritizes community interest will reportedly be able to execute “true governance decentralization”, which is the reason why the exchange predicted the sphere to witness a shift in DeFi governance being coordinated using a variety of mechanisms.

KuCoin Labs further put up recommendations that the fundamental operational principles of DAOs carry sufficient reasonability to be utilized as foundations for the development of legal entities.

Regardless of the possibility for the sector to experience a DAO expansion breakthrough in the next year is slim, the report notes that continuously making their mechanisms better may set the stage for their adoption by firms and corporations also.

Meanwhile, blockchain-powered protocol Syndicate reportedly disclosed details of the creation of 450 new DAOs within its platform, in a period of three weeks, taking up 10% of every DAO in existence.