Vlad Kamyshov, CEO of EVAA Protocol, warns about how tariff policies could disrupt the crypto market by exacerbating inflation and leading to higher interest rates from central banks. He notes that these conditions reduce liquidity for digital assets, making them less attractive and prompting investors to seek safer avenues. Stablecoins are directly impacted as a stronger dollar raises costs for international users, while DeFi platforms may see reduced activity. Kamyshov sees potential growth for DeFi solutions but questions their adaptability in a volatile economic landscape.
Vlad Kamyshov, CEO of EVAA Protocol, expressed concerns regarding the impact of tariff policies on the digital finance sector. In a communication to crypto.news, he highlighted that import taxes can elevate consumer prices, leading to inflationary pressures. This situation may compel central banks such as the Federal Reserve to increase interest rates or postpone expected rate cuts.
Internally, the Federal Reserve is divided, with some advocating for steady interest rates or gradual reductions. Conversely, rising short-term inflation expectations may drive other policymakers to impose higher rates. Kamyshov notes that such higher rates and a stronger dollar reduce liquidity, making capital access more costly, hence prompting outflows from cryptocurrencies and DeFi tokens as investors seek safer assets like bonds or gold.
Stablecoins, vital for DeFi operations, are also affected. With the dollar strengthening amid expectations of interest rate hikes, USD-pegged stablecoins such as USDC, USDT, and DAI encounter indirect pressures. For international users, a stronger dollar increases the costs associated with acquiring and holding on-chain dollars, intensifying the challenges faced in the market.
The effects extend to DeFi platforms, where protocols like Uniswap, Aave, and Compound may experience decreased activity and total value locked (TVL) due to diminished attractiveness of these digital assets. Kamyshov warns that lower stablecoin inflows can result in thinner liquidity, wider spreads, and inefficiencies in trading.
Despite these challenges, Kamyshov believes in a potential shift towards decentralized finance as a refuge from state control. Innovations aimed at reducing dollar dependency, improving capital efficiency, or introducing alternative stablecoin solutions could present growth opportunities. Nevertheless, he emphasizes that the critical question remains whether DeFi protocols can swiftly adapt to a macroeconomic climate characterised by inflation, protectionism, and regulatory uncertainty.
