DeFi and Real World Adoption Stories from 2020

Decentralized Finance, nicknamed briefly as DeFi, is all about a new monetary system built on blockchains. This term gathers a diversity of monetary applications with the purpose of getting rid of financial intermediaries and brokers.

DeFi basis is represented by decentralized applications, which are also known as DApps. These plug-and-play tools facilitate access to financial services for any individual by means of a smartphone, at low expenses. The reason for gaining user’s interest and trust, is the fact that DeFi allows the financial activity to happen without intervention from centralized specialized money institutions.

This system is open to everybody, and does not include the censorship, and application requirements, nor the censorship present within the centralized financial institutes, like banks, for example. And let’s not forget that the potential to reduce the financial costs for users is estimated to an amazing 50%.

DeFiPulse.com, 18/10/2020

DeFi adoption is currently in the pioneering stage. Just like with all beginnings, many things are unclear, underdeveloped and shaky. On the other hand, there are some enthusiasts that generate a certain frenzy about this system like the recent hype around Uniswap, SushiSwap or Yearn Finance.

The worldwide data for 2019, shows that DeFi includes a total value of over $500 million locked in DeFi contract (with currently over $11b acc. to DefiPulse). These DeFi tokens are found in rankings like the Liquidary DeFi ranking. The users are estimated to be around tens of thousands, at present.

When compared to the 40 million of cryptocurrency users, this is very little. But it’s also good news, regarding the future of DeFi. The horizons for DeFi adoption are wide open.

Being such a versatile and dynamic area, there is for sure competition for DeFi – namely “traditional” FinTech. Here are some of them, with significant results.

Rally Rd. which is a free app allowing its users to invest in individual blue-chip collector automobiles. APiO is a financial services provider for companies, businesses, investors.
Progcap is a financial technology provider facilitating debt capital for micro and small entrepreneurs. Advanced Share Registry provides share registry services for individuals and companies of all sizes.

Of course there are also the big FinTech unicorns like Robinhood, Square or N26.

As you can see, DeFi has many advantages, however this system is at the beginning. So far, during these early stages, the main actors are a few courageous adopters of blockchain and cryptocurrency. Is it worth to develop DeFi real life adoption, and to get involved at a larger extent?

Obviously, it is a market with a billion users' potential. However, being at an early stage, there are risks and uncertainties. Financial specialists say that DeFi adoption will surely increase within the next years, also being stimulated by the current worldwide realities and major changes in society’s structures and restricted human interaction.

One of the direction for DeFi development was set up by Mozilla community, called “Spread Firefox” (2008). This community-built browser practically leads to a system of concentric circles, which increases continuously. The inner, most tight circle is that of pioneers and first adopters.

Their development idea is: the more enthusiastic and devoted the people of the inner circles are, the fastest the outer circles develop, bringing in numerous others.

The second type of development started together with Uber, since 2008. Uber puts at the center of its system a peer-to-peer technology, connecting customers to the company’s services.

The platform allows clients to be matched with the most appropriate driver. They are not mainly focused on the technology side, however on the easy UI/UX for customers. Their philosophy is to facilitate this platform in any way their customers might request.

Both of these systems are applicable for DeFi adoption increase. They have the concentric circles systems, and for now there is an engagement predominantly from the enthusiasts. The outer circles are yet to be developed. This is just a matter of time. And then, there is the strong concern towards user’s needs. The services need to be fast, cheap, with all the help permanently at hand. There is also the requirement to anticipate still non-existent user needs.

There are numerous developers, at a global level, that create very efficient dApps for the entire range of DeFi use-cases. Challenges are, nevertheless, many. So the increase of DeFi adoption depends on getting over all these challenges, like scalability, auditability & security.

DeFi adoption goes in a very promising direction for all our finances. Sure, it is still very early to talk about certainties, but its tendency is to grow fast and engulf more and more open-minded users. So far, De Fi seems to bring in the idea of a fair exchange for everybody, and a greater freedom for our finances.