Why DeFi is the Future of Finance
The current financial system is broken.
The U.S. Federal Reserve, and other central banks around the world, are printing trillions of dollars out of thin air. After experiencing one of the longest stock market bull runs in history, the global economy is now proving to be much less anti-fragile than many had imagined. We are entering into a worldwide recession.
Even during the best of times, it still takes days and requires high fees to transfer money through traditional financial institutions. The limitations of our malfunctioning banking system are compounded by the fact that about half of the world’s population doesn’t even have access to it. The need for alternative options is increasingly evident.
Decentralized finance, also known as DeFi, is an alternative system wherein anyone, anywhere around the world can access digital assets that are governed by computer code and community consensus rather than the whims of central bankers.
Bitcoin is the world’s first blockchain-based cryptocurrency. Since its inception in 2009, Bitcoin has proven to the world that you can have a currency that is not governed by a centralized authority yet still maintains value. Instead, Bitcoin is distributed, fast, open, borderless, and censorship resistant. It enables people to transfer value globally with low fees.
Several years later, Ethereum emerged onto the scene as a global open-source platform for decentralized applications. With this innovation contracts can now be automated, which reduces errors, costs, and the need for middlemen in finance. This has paved the way for the advent of DeFi. Whereas before we mostly relied on banks for savings and lending, DeFi applications provide these services in a peer-to-peer manner via smart contracts and cryptocurrencies.
Under this new paradigm, money flows more freely. People can leverage their assets to get loans without approval from a bank. Interest rates on savings accounts can range between 5–10% per year with very low risk of default.
Yet during the recent cryptocurrency market crash, one of the most successful projects in the DeFi space, MakerDAO, experienced an emergency shutdown of their platform. A series of costly liquidations caused MakerDAO’s stablecoin DAI to have a $4 million deficit. This event serves as a reminder of the current limitations and experimental nature of DeFi.
Nearly 99% of the global population has yet to adopt cryptocurrencies, let alone try out DeFi products. For the vast majority of people, DeFi applications are too complicated. How do we bring the other 99% of people into the world of cryptocurrencies and DeFi? We need solutions that are simple, secure, scalable, and streamlined. That’s what we’re building at Rio DeFi.
Rio DeFi is a blockchain technology company whose mission is to bridge the gap between traditional and decentralized finance. We are partnering with industry leaders to provide the traditional services that people have come to rely on: secure storage, audited processes, good customer service, and account recovery options.
Our goal is to make DeFi applications even more accessible than a bank account by creating an end-to-end ecosystem, from fiat currencies to cryptocurrencies and back, so that anyone can easily save, spend, and lend their digital assets. Join us in building a more decentralized financial future!
About Rio DeFi:
Rio DeFi is a blockchain technology company with a mission to accelerate the mass adoption of digital assets by bridging traditional and decentralized finance. At the heart of the Rio DeFi ecosystem is Rio Chain, a powerful digital infrastructure tailored for mass adoption. We prioritized security, speed, scalability, and interoperability; and operate across blockchains to leverage the strengths of each.