It has established an entirely new financial paradigm and the $100bn DeFi market is expected to grow significantly over the next few years as models continue to evolve. ‘Īmong nations with developed economic systems, DeFi has highlighted the potential for blockchain to disrupt financial ‘legacy’ systems and open up access to new users hunting for better yields and moving liquidity around. Speaking about the adoption of RealFi, Charles Hoskinson said: ‘It is our belief that over the next 12 to 24 months the majority of DeFi providers will be systematically upgrading to RealFi, to actually encumber identity, and metadata, to create proper standards and make sure they're secure and functional and to ensure they resolve the issues of regulation and governance, and also they're in the market for new customers. In this way, most of the usual regulatory constraints around lending and borrowing do not apply, while fees tend to be significantly lower. Users interact in a peer-to-peer fashion with no central governing body, relying instead on smart contracts and the inherent transparency and immutability of blockchain-based systems. Also, borrowing is normally re-invested in further crypto opportunities. This is because little (or in some cases, nothing) is known about the borrower, and there is little recourse if the loan is not paid. Loans are typically fully-, or over-collateralized. Instead, this is done between individuals, in a peer-to-peer fashion, using blockchain as the underlying ledger to support and enable the transaction. People do not need to go through any one private enterprise, such as PayPal, Western Union, or a bank, to send, borrow, or lend money. By removing the middlemen, the bankers and the brokers, DeFi has brought in a new generation of users and the sector has enjoyed meteoric growth, now estimated to be worth some $100 billion.ĭeFi is an open financial network. DeFi uses ‘smart contracts’ on a blockchain to give anyone access to banking using a public, decentralized, ledger. When it comes to the story of blockchain’s recent evolution, it is decentralized finance (DeFi) that has taken center stage. “The point of RealFi is to serve real people real finance, and thus be able to innovate and do interesting things.” - Charles Hoskinson
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