Why DeFi Is So Important?

PROXI
PROXI
Feb 20, 2020 · 2 min read

Decentralized finance, or DeFi, has been widely seen as a new opportunity to bridge the gap of global banking inequality.

The World Bank states that around 1.7 billion people around the world do not have access to banks, or mobile money. DeFi helps to eliminate the financial barriers in developing countries by creating “permission-less” banking, meaning that unbanked citizens do not need credit checks to begin banking with DeFi. Anyone with access to the Internet is able to access DeFi.

Without belonging to a bank, individuals can face financial restrictions because of their inability to access credit scores or have specific identification documents required to take out a loan. With cryptocurrency and financial platforms built on a DeFi network, anyone is able to take out a loan as long as they are able to make a deposit.

DeFi can also assist those in developing countries by allowing access to various forms of capital. Sometimes, governments can impose capital controls to help protect the value of their own dollar from dropping. Citizens can invest their finances in cryptocurrencies that mirror the value of other global currencies, like DAI, which pairs the value of the USD.

DeFi has also led to the creation of decentralized marketplaces, increasing the global accessibility and transparency in buying goods and services. Major online retail platforms like Amazon and Etsy act as an intermediary and dictate the rules between buyer and seller. However, with decentralized marketplaces built on blockchain technology, Smart Contracts have replaced the need for third-party intermediaries. The creation of decentralized marketplaces allows for the ease and accessibility of goods with the added security and anonymity that blockchain technology guarantees.

DeFi helps to alleviate the barriers that unbanked individuals face and can also help protect and increase individual’s assets around the globe.

Sources:

https://exodus.io/blog/what-is-defi/#benefits

https://coincentral.com/decentralized-marketplace-blockchain/

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PROXI

DeFi 2.0: Cross-chain Derivative Issuance & Credit Lending

PROXI

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