How DeFi Solves the Lack of Global Banking & Financial Inclusion
DeFi is becoming an established branch of the cryptocurrency industry!
The decentralized finance (DeFi) sector exploded in mid-2020, and its growth still continues, with no signs of stopping. There are multiple reasons why DeFi became such a massive hit in the crypto industry, after numerous trends that came before it failed. In fact, these days, we can safely say that DeFi is much more than a simple trend — it is becoming an established branch of the cryptocurrency industry.
Why is DeFi so important?
The reason why DeFi continues to thrive even during the global pandemic is the fact that it offers decentralized online banking. Banking comes with countless benefits that allow you to improve your life and financial situation. It allows you to take out a loan and buy a new car, house, or start a business. It allows you to open an account and store your money, knowing that it will be safe. And, of course, it lets you make payments, exchange money for different currencies, and much, much more.
However, for all the benefits, it is not without issues. Traditional banking is fully centralized, meaning that you must keep your money in the hands of an institution that will manage it and control it. If the bank wanted to, it could freeze your account and not let you use your own funds. Banks also take large fees when you make payments, they take massive interest on loans, and worst of all — they are not transparent with how they manage the funds.
They don’t even serve all the people equally. If you are not wealthy enough, you can only take out small loans. If your credit score is bad, you don’t get a loan at all. There are billions of people who don’t even have access to the banks, which is why they still live in extreme poverty, with no access to the global economy in the second decade of the 21st century.
DeFi can solve all of these things with ease. All you need is a computer or a smartphone and internet access, and that’s it. From there on, you can open up your personal wallet, obtain some DeFi coins, and use them for a number of activities that will not only let you use money, but also make more of it by doing practically nothing.
Take staking as an example. All you need to do is lock up your coins into your wallet and not use them. That’s it. In return, you get rewards. The same is true for liquidity providing, yield farming, or offering your money as a loan to borrowers. You don’t even have to do all that much yourself, either, thanks to projects like DAOventures, which is a personal robo-advisor and automated money manager. It is pretty much the simplest tool out there for investing and managing DeFi portfolios.
Thanks to blockchain and smart contract technology, your money is still safe, and this method of earning rewards is safer than trading, as you won’t lose your money. Its value may decrease if the coins’ prices drop, however, so there is some risk involved, but as long as you are vigilant and careful, you should know when to make your move and either exchange funds for stablecoins or withdraw them.
DeFi solves the problems that banks don’t care to deal with
Thanks to its simplicity and accessibility, DeFi is available to anyone in the world, as long as they have the two things we mentioned — the internet, and a device they can use to access it. Furthermore, DeFi tokens are still cryptocurrencies, meaning that you can still use them for trading, investing, making transactions, and even for buying things if you find someone who would accept them.
Simply put, DeFi solves the problem of global banking — something that even the largest banks could not solve, or rather, something that they couldn’t be bothered to solve, since there is no profit in it. DeFi accepts everyone as part of the community, offering the same services like the banks, only better, thanks to decentralization. You become the sole owner and manager of your money, and no one can take that away from you.
DAOventures is a DeFi robo-advisor and automated money management platform. Imagine “Robinhood for DeFi”. It is our mission to make DeFi simpler, accessible & inclusive. We believe in creating a simpler, more accessible, and more open world that is permissionless, inclusive, and guided by our DNA of continuous learning, integrity, and transparency.