New Waves of Use Cases Drench Mainstream Finance

Decentralized finance, or DeFi, is a growing ecosystem of permissionless digital assets. Critical ingredients include open-source software acting as gateways for secure interaction.

Wallets, decentralized exchanges, lending platforms, and insurance are product examples within the realm of DeFi.

Bitcoin embodies DeFi as a global, peer-to-peer monetary network. In other words, Bitcoin exists as an alternative to traditional — government printed — money.

And now more than ever before, DeFi is proving that 11+ years of building blockchain infrastructure was worth the effort. Nowadays, the globe’s economy is on the precipice of disaster.

With that uncertainty comes doubt in world leadership’s ability to right the ship. The trickle-down effect has citizens searching for other ways to live and other means of doing business.

Lately, there’s been a stampede to DeFi, and you’ll soon discover why. So, just how far has alternative finance come? A long way indeed — recently crossing over into billion-dollar territory.

Maker Leads the Charge

Back in early February, the U.S. dollar equivalent of funds flowing throughout the DeFi ecosystem topped one billion. Today’s figure is closer to $860M but equally impressive is the dominance of the Maker project.

Image credit: DeFiPulse.Com

As of late-May, 2020, the top-3 DeFi participants account for nearly $675M in locked value. Of that gigantic sum, over $450M is with Maker.

Why such a massive draw? We can sum up that multi-million dollar question with one word: Stability.

Maker is the project behind two stablecoins — $DAI and $SAI — built on the Ethereum network. Stablecoins are cryptoassets trying their hardest to maintain a value of exactly 1 U.S. dollar at all times. Sometimes they’re backed by dollars or gold.

Others are backed by different cryptocurrencies and have an elastic supply that matches demand and strikes the perfect balance — right at $1 per unit.

Volatility is great for currency traders drawing charts and looking for setups. But that’s not the case if you’re simply trying to earn a living.

We needn’t look hard to find benefits in DeFi’s stability. The world now consists of 195 different countries. And monetarily, some of those nations can’t seem to get their act together.

The go-to tactic for troubled economies is printing more fiat. But checking in on Venezuela and Zimbabwe shows what happens if central banks’ money machines go “brrr” for too long.

But those countries aren’t the only example — let’s discuss the personal experience of one DeFi backer going all-in on his home turf.

DeFi IRL

Slip into your empathy shoes for a moment and imagine yourself in a place where your savings see consistent debasement. In extreme cases, the meal you paid $20 for today might cost $50 next week.

On some occasions, the powers that be may come along and freeze everyone’s bank accounts while imposing restrictions on withdrawals.

Given these circumstances, you’ll find ways to live outside of your government’s financial trappings. And in Argentina, DeFi isn’t a ‘someday’ product — it has merit in the here and now.

When inflation tops 50%, you do your best to hold as little fiat as possible. Just enough to pay the bills. Mariano Conti — an employee of the Maker Foundation — is the posterchild for that lifestyle:

 

Higher interest rates on savings— using Compound, for example — and enhanced stability make DeFi a natural choice for people in developing economies. Although Mariano lives in South America, we see similar scenarios here in Southeast Asia. Not necessarily from an inflationary point of view — more of an ‘unbanked and underbanked’ situation.

As DeFi continues to scale, we’re excited to be part of the movement. Because so many residents of SEA are unable to enter the digital economy, we’re making it easy for them to do so.

Upon launching our mobile crypto wallet — only after cybersecurity testing finishes — the RedFOX chain becomes an official gateway to DeFi.

Toweling off

More control over personal finances is at the heart of the DeFi movement. And by offering products and services outperforming those of mainstream finance, the trend is gaining traction.

Why subject yourself to financial tyranny if there’s another way? People like Mariano Conti are living proof that alternate monetary ecosystems are viable solutions to modern-day problems—it’s up to us to take action.

Only time will tell us how virus-infected economic systems will perform in the future. But as 2008’s financial crisis showed us, we can’t rely on slow-moving governments to fix our monetary woes.

DeFi smart contracts are publicly auditable — which provides immense transparency. And that ‘laying everything bare’ mindset is what continues to attract individual and big-money institutional investors alike.

If we want to witness real monetary change, we must take self-custody of our finances. And our upcoming mobile crypto wallet joins a growing network of decentralized tools allowing anyone with an Internet connection to do just that.


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