Have you ever wondered how each Fintech product claims to be the revolutionary product of the decade? Well, they are not wrong to believe it as that is their product and in their eyes, they have created something as valuable to humankind as “Fire”. The question is, would it be considered revolutionary by the consumers.
The reality is that the so-called Fintech companies haven’t removed the true barriers that will be most beneficial for the consumers. They surely have improved the existing financial system but that’s not something which the consumers will consider revolutionizing.
All That Glitters is Not Gold
Even today, banks are the true winners in the financial world. They are the ones to amass a huge amount of wealth on the investments made by the common people. People saw hope in Fintech companies and expected them to solve the woes that the current financial industry faces.
The number of Fintech companies exploded globally since the last few years and today, there are 1463 Fintech companies around the world. Many of these 1463 Fintech companies are quite good at what they do. Yet, there has been no Fintech company that has been able to solve the major issue about banks benefiting the most from the global financial markets.
So was all the talks about Fintech being the messiah that the global financial industry needed, just meant some random marketing words, or did it mean anything? The truth is Fintech didn’t mean to create a tech-powered new financial revolution. It was always aimed at improving the current systems. Among all available technologies today, blockchain has the most prominent chance to bring the customer at the center of the financial world, rather than the banks.
Decentralized Finance is the Platinium to the Fintech’s Gold
Decentralized Finance or Defi, as it is popularly known, is a term that encompasses all the financial products that are built on the top of the open-source blockchain. It allows anyone with an internet connection and smartphone to access the world of open finance.
Fintech revolution fell short of many of its goals as it is just the shinier version of the traditional finance companies. Surely, companies like PayPal, Transferwise, and Payoneer have benefited the customers and made it easier to send money across borders – but it didn’t change how the financial system works. Similarly, mobile money has made it easier for people in East Africa to access mobile banking. However, it hasn’t solved the core issue of how most of the people in Eastern Africa can avail of their services.
Decentralized Finance is where true financial innovation happens. It has proved to be beneficial for both the professionals and the end customers within the financial world. The top use cases of DeFi include crypto lending & borrowing, DeFi derivatives like perpetual futures, and asset management-focused DeFi wallets.
There is a long list of innovative products in the DeFi segment of the global blockchain industry. It includes some of the leading players in the DeFi industry like Gnosis – A prediction market for the next generation, Groundhog Network – Powers Crypto-based Subscription Services, Market Protocol – Connecting derivatives with blockchain, and many more.
Let’s explore one unique problem that the financial industry is facing and how DeFi is helping to solve it to understand how significant DeFi is for the global financial industry.
Worthy Innovation – Defi Case Example
We have seen how mobile money made it easy for people in Africa to access banking services. It has benefited the East African people greatly but it didn’t solve the issue of accessibility. The majority of people are still not a part of the mobile money network.
A DeFi startup known as PlutusDeFi is bringing an innovative solution to solve the issues associated with mobile money in Africa. The people there would be able to deposit, withdraw money as well as earn interest on it through market protocols Aave, Compound, DyDx, and Curve.fi. PlutusDeFi is empowering the people to send their local currencies to authorized agents and PlutusDeFi mobile money business accounts via mobile money credits.
The company is aggregating multiple DeFi solutions in one place. It will help both individuals and institutions access the new-age financial products without worrying about privacy and security. One can gauge the value of a company through the investor interest in a project. PlutusDeFi raised $1M from the investors so far. The last $150K that PlutusDeFi will raise, comes with a bonding curve. NGC Ventures and Cornerstone VC have doubled their investments in PlutusDeFi in its final fundraising round.
All DeFi projects have been launched with an aim to solve the challenges that the Fintech industry hasn’t been able to solve. We are in the era of DeFi and the ride ahead may be bumpy, but DeFi will reach its goals regardless of all the obstacles that will be put in front of it.
DeFi is bringing in the financial revolution that Fintech failed to initiate. Investors are also bullish on DeFi solutions and thus, we expect the investor sentiment to remain strong on DeFi products regardless of the economic challenges worldwide.