Decentralized Finance (DeFi) is Revolutionizing Global Finance, Creating a Potential $128 Billion Market(1)
Since Jan. 2020, DeFi User Growth is Up Roughly 2,700%,(2) Fueling Substantial Growth Potential for DeFi Technologies (NEO:DEFI)(OTC:DEFTF)
May 20, 2021
Decentralized finance or DeFi is about to change everything about global finance.
Here’s why it could soon revolutionize just about everything.(4)
- DeFi is entirely transparent. Through blockchain technology, all transactions are publicly visible, tamper-proof, and verifiable by everyone. All while removing the need to trust a 3rd party.
- DeFi is free of intermediaries. Every interaction between two parties is based on a smart contract. A smart contract is codified law. This makes it interoperable, self-executing, and permissionless. A smart contract also eliminates the need for intermediaries that charge fees and slow down processes.
- Defi is open to everyone, including the 1.7 billion people around the world with no access to financial services. That’s about 20% of the global population.(4)
Think about it.
Decentralized finance could lead to borderless, open alternatives for just about every financial program out there – bank accounts, loans, trading, you name it. All while eliminating the need for a central authority like you’d find in traditional finance.
In addition, according to Peter Wall, head of Argo Blockchain, as quoted by Forbes:
DeFi Technologies Inc. builds and manages assets in the decentralized finance sector.
It focuses on enhancing shareholder value through various investments, including the acquisition of DeFi protocols, equity, debt, or other securities of publicly traded or private companies. Along the way, the company is giving shareholders extensive access to the next wave of financial innovation: decentralized finance, an estimated $128 billion market.(1)
With such massive market opportunities, DeFi Technologies could benefit significantly with:
After peaking at around $3.20 a share, the DEFI stock did pull back to potential support at approximately $1.09. While the stock got caught up in the pullback with digital currencies, the drop could be at its end based on the chart’s recent sideways movement. Given the interest in the sector and DeFi, the DEFI stock could potentially re-test that prior peak of roughly $3.20 in the near term.
Additionally, many of its short-term, medium-term, and long-term technical indicators appear bullish, including its 20-200 day MACD oscillator, 50-150 day MACD oscillator, 50-200 day MACD oscillator, its 200-day moving average, and its 100-200 day MACD oscillator.(7)
Here’s the Current Problem with Centralized Finance….(6)
1) For one, there’s a severe lack of transparency. Exchanges, banks, brokers, FX providers, and other intermediaries have opaque pricing, margin, spreads, and commissions.
2) There are censorship issues. Capital controls prevent people from transacting in the world economy and escape poverty.
3) Transaction costs can be sky-high—especially at banks and other service providers for simple services such as making wire transfers.
4) There are counterparty risks. There are significant worries of counterparties not abiding to contract terms. This creates additional insurance costs, for example.
5) The current financial system has dated systems. The lowest layer of technology stack can run on code from the 1980s/1990s.
6) Extremely high cost prevents the unbanked from entering the mainstream financial system.
The Solution May Be Decentralized Finance (DeFi)(6)
DeFi is becoming even more popular by the day.
The goal of DeFi is to make financial transactions more secure, more accessible, and more open and internationally universal. In other words, DeFi is a global, more accessible, open alternative to everyday mainstream financial services- savings, loans, trading, insurance, and more.
- With DeFi, there’s complete transparency. Through blockchain technology, all transactions are publicly visible, tamper-proof, and verifiable by everyone.
- DeFi users are in complete control of their transactions and assets. The blockchain guarantees an immutable and traceable book of records for all transactions.
- DeFi is free of the “middle man.” In fact, every interaction between two parties is based on a smart contract. A smart contract is codified law that increases efficiency while removing the need for intermediaries.
- There are zero counterparty risks. Smart contracts only execute when both parties fulfill all requirements and therefore eliminate counterparty failure.
- DeFi is built on the blockchain. Services are run by permission-less self-executing, automated contracts with open-source code.
- In addition, everyone can transact as decentralized finance has lower costs and does not prevent people from accessing the network.
No wonder DeFi is becoming so popular.
According to a CoinDesk report, “CoinGecko calculates a total market capitalization of $128 billion for decentralized finance, the corner of the digital currency industry that represents a wide range of lending, trading and betting activities carried out almost entirely on blockchain networks using tokens as proceeds and collateral.”(1)
Even better, the number of DeFi users is off the charts.
In January 2020, there were about 92,873 DeFi users. As of May 31, 2021, there are about 2.6 million – and it’s only growing, with companies like DeFi Technologies helping shareholders obtain access to that very market.(2)
Even leading institutions stand behind DeFi, including Oppenheimer Funds, Ameritrade, Santander, Rothschild, Fidelity, Soros Fund Management, JP Morgan, Visa, Andreessen Horowitz, Polychain Capital, Coinbase, Dragonfly Capital, and Pantera Capital, to name a few.(6)
DeFi Lending and DeFi Exchanges May Have the Most Potential to Reshape Finance
Out of all of the financial services that DeFi is involved in, two areas show the most potential: DeFi lending and DeFi exchanges.
DeFi lending has significant potential to disrupt and eventually overtake worldwide P2P lending. DeFi lending has quickly become increasingly popular since it lets users borrow and lend in a relatively safe and easy way- without third parties and intermediaries. In 2018, this market was valued at $34.16B. It is now projected to reach $589.05B by 2025- an astronomical CAGR of 50.2%. (9)
Many experts also believe that decentralized trading could eventually become the face of digital currency exchanges. Compared to centralized exchanges, decentralized exchanges offer more control of your own funds, transparency, smaller risk of price manipulation and falsification of trade volumes, less exit scams, and counterparty risks.(10)
Successful companies tend to possess common traits, and one of those traits is a strong management team. DeFi Technologies appears to have that ground covered.
CEO of DeFi Technologies
- Founder & Chairman of Secfi
- Raised over $600M for Secfi
- World Economic Forum Global Shapers
- University of Cambridge
Ryan Ptolemy, CPA, CGA, CFA
CFO of DeFi Technologies
- CFO of Aberdeen International
- Former CFO of multiple public and private companies
Advisor at DeFi Technologies
- Managing Director at Palmetto Ventures
- Former Director at Yahoo!
- Former Senior Director at Alibaba Group
Olivier Roussy Newton
Entrepreneur in Residence at DeFi Technologies
- Founder of Latent Capital
- Founder of HIVE Blockchain
- Chairman at BTQ
Advisor at DeFi Technologies
- EMEA Founder at Snowflake
- Former VP Sales EMEA Bazaarvoice
Anthony “Pomp” Pompliano
Advisor at DeFi Technologies
- Co-Founder & Partner at Morgan Creek
- Investor at Pomp Investments
- Former Product Manager at Facebook
Source 2: https://duneanalytics.com/rchen8/defi-users-over-time
Source 3: https://cointelegraph.com/news/defi-more-than-a-technical-gimmick-its-the-future-for-big-business-ceo-says
Source 4: https://defi.tech
Source 5: https://www.forbes.com/sites/robertfarrington/2021/03/23/explaining-defi-and-how-it-will-revolutionize-financial-services/?sh=5ae70c551d08
Source 6: https://defi.tech/defi-technolgies-deck-12-04.pdf
Source 7: https://www.barchart.com/stocks/quotes/DEFI.NE/overview
Source 8: https://www.barchart.com/stocks/quotes/DEFI.NE/interactive-chart
Source 9: https://bit.ly/3yWwBfS
Source 10: https://academy.ivanontech.com/blog/decentralized-finance-in-2020-defi-trends-to-keep-an-eye-on
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