What is DeFi? DeFi stands for Decentralized Finance, a fast growing movement that aims to build innovative and globally available financial services without gatekeepers deciding who gets access or intermediaries charging steep fees at every turn. There are a number of companies and services in DeFi, each looking to improve upon the existing financial system […]
2 min read
Published on November 19, 2019
DeFi stands for Decentralized Finance, a fast growing movement that aims to build innovative and globally available financial services without gatekeepers deciding who gets access or intermediaries charging steep fees at every turn.
There are a number of companies and services in DeFi, each looking to improve upon the existing financial system in several important ways. These improvements generally fall into one of three areas:
1. Increased access to high quality financial services
2. Increased efficiency of financial services
3. Increased transparency of financial services
Let’s take a closer look at each.
Despite the many technological advances of the modern age, there are still over 1.7 billion people around the world that do not have access to a bank account. When we consider the number that lack access to basic financial services, like loans or safe investment products, that number easily doubles. Even in the US, the wealthiest nation in the world, over 55 million people lack access to high quality financial services.
DeFi aims to deliver high quality financial services to everyone in the world, which is possible because DeFi products are built and administered by cryptocurrency technology. Just as the internet makes it cheaper and easier to rent a house through Airbnb, cryptocurrency makes it cheaper and easier to save your money with a product like Dharma. And because DeFi is built on open financial networks like Ethereum, anyone with access to an internet connection is able to access DeFi services.
Unfortunately, even 20 years into the new millennium, financial services still resemble the DMV more than Airbnb. Financial services are slow, expensive, and plagued by manual processes that make them slower and continually expensive. The technology underpinning legacy financial services just isn’t good enough for the digital age of finance.
DeFi is different because, as we’ve discussed, it replaces trust in humans and archaic infrastructure with code. This enables DeFi to be much faster and cheaper than their legacy analogues.
All DeFi services are built with transparency and trust minimization as core principles. This is important in order to avoid systemic downturns such as the 2007-8 global financial crisis. Indeed, even the former chairman of the CFTC, J. Christopher Giancarlo, has stated that “it would have made [a big difference] on the eve of the financial crisis in 2008 if regulators had access to the real-time trading ledgers of large Wall Street banks.” DeFi has the potential to make this a reality.
DeFi aims to improve upon the existing financial system by providing financial services that are widely accessible and fair to anyone, from Argentina to Zimbabwe, regardless of wealth or status.
We do this by using cutting-edge cryptocurrency technology to deliver globally-accessible financial services that are as efficient and as fast as the Web2.0 products we all know and love.
The simplest way to get familiar with DeFi is by creating a Dharma account and experience the magical moments for yourself. You can sign up for Dharma easily in just two steps:
1. Head over to Dharma.io
2. Sign up using your Coinbase account
Once you’ve created your Dharma account, you can start earning interest on your crypto instantly with the technical complexities of DeFi masked under the hood!