Exponential Framework on DeFi
Introducing Decentralized Fractionalization
Technologies evolve at an accelerated speed, pushing society to rapid behavior changing. The digitization process is the transformation click. From that, what was previously scarce, now leads to an abundant path. We could perceive this in several examples, such as Digital Photos and Smartphones, and we can expect great revolutions for the next few years.
The steps to abundance consist of the commonly known Six Ds of the Exponential Framework, proposed by Peter Diamandis and Steven Kotler, in their book “Bold”. This concept is composed of:
- Digitization
- Deception
- Disruption
- Dematerialization
- Demonetization
- Democratization
The Six Ds framework represents the phases of exponential technologies evolution. The first D of this model is Digitization. According to Kotler, technology becomes exponential once it becomes digitized, and it hops on an exponential growth curve. Some examples can be the digitalization of cameras, music, and movies. In the Cryptocurrency context, since 2008, with the beginning of Bitcoin and Blockchain technology, we have started to see the digitization of money.
As it takes a while for these technologies to set in motion, we have a long period of Deception until the innovation proposed breaks through. After this moment, we face a Disruption in the traditional processes: these new digital technologies bring more effectiveness and cost reduction. The disruptive technology has features that supersede long-time established habits and products. The fourth D is the Dematerialization process, in which physically separated products are removed from the market, having their separated features combined in just one product.
Moving to the end of the Six Ds, we have the Demonetization, in which a variety of services is offered at costs approaching zero. Technologies that were neglected in the past few years have just passed through the “click” of Disruption and will soon be available to everyone at a little cost. We can also easily see these steps in Blockchain technology, as it has a massive impact on financial institutions. It enables transactions to move from a centralized system to a transparent cryptographic network, brings significant cost reduction related to the exclusion of intermediary parties, and speeds up transaction times.
Finally, the last D: Democratization. Since something has been digitized, more people are able to access this product. It means that powerful technologies are no longer only in the hands of governments or the elite. All the population is supposed to have the power to enjoy innovation. Along with the Democratization process, we have been experiencing a global change of paradigm due to the “Ownership vs Access” concept. There is this trend of people moving from being the owners of something to pursuing access to services, without owning them. The most common examples of this reality are Uber, Netflix, Spotify, and Airbnb. The popularization of these Apps brought cost reduction and, consequently, millions of users around the world.
To know more about the Six Ds of the Exponential Framework, we recommend watching the video Abundance In the Exponential Era by Singularity University:
Decentralization as the final step
Continuing with the Exponential Framework’s analysis, nowadays we face a scenario that needs urgent disruption. The discrepancy between developed and underdeveloped countries is enormous. While in the USA, more than 50% of families invest their money in the stock market, in Brazil, for example, less than 1% of the population access these services. It gets even more absurd when the number of unbanked people is analyzed: more than 1 billion around the world do not have a single bank account.
The financial structure we know is a result of an experimental process with enormous fragility due to its centralization and architecture of monetary emission. However, these flaws have stimulated the creation of a complete, resistant, and robust system that we are now witnessing. That’s where one of the main proposals of Decentralized Finance (DeFi) comes in: to make everyone around the world have easy access to all the financial markets’ features, in a decentralized way, with cost reduction and no censorship. The financial technologies developed guarantee the provision of services without discriminating against the poorer. Besides, these technologies bring facility and safety to anyone to participate in this network of financial services.
Services such as
- Payments and International shipping;
- Custody and Derivatives;
- Marketplaces;
- Lotteries and bets;
- Stablecoins and Collateralization;
- Credit and loan;
- Investment fundraising;
- Regulation and auditory;
- Insurance and capital protection;
- Allocation and Investments Management;
- Automated Liquidity;
- Securitization.
Which were restricted and highly bureaucratic to be accessed, with DeFi they become straightforward, safe, and democratic.
Therefore, analyzing the access democratization context of the Exponential Framework and Decentralized Finance, we can propose a 7th D, which is the Decentralization. Beyond all the structural advantages such as resistance, immutability, and peer-to-peer (P2P) networks without censorship, decentralization allows the ownership distribution of companies and assets. In the case of companies, this is done through Decentralized Autonomous Organization (DAOs) managed by token holders; and in the case of assets, the distribution happens through fractionalization.
Once you decentralize and distribute the ownership of services and companies, you achieve a much more equal environment with more opportunities to all, in which anyone can become a user, provider, or owner, without any restriction.
In this scenario of property distribution, we would like to introduce Nftfy, a Decentralized Application (DApp) with the proposal of Fractionalizing Non-Fungible Tokens (NFTs) into fungible ERC20-compliant Fractions. Nftfy is an Ethereum-based, decentralized, and open-source platform that runs autonomously without censorship. It is an easy and fast way to Fractionalize a Non-Fungible Asset, allowing anyone to trade Fractions of it.
Considering that from now on, there is no more friction in the securitization process, and the number of securities issued in the world must follow the exponential framework, increasing in an unimaginable amount. These are effects of the financial democratization and decentralization provided by Blockchain.
By saying that, we invite you to continue with our next article that starts a discussion about Decentralized Fractionalization, which is deeply analyzed on Nftfy’s White Paper and gives a solid base about the theme. To know more, follow us in our Discord group.
