Understanding Decentralized Finance (DeFi) – Census

Understanding Decentralized Finance (DeFi)

Here is a selection of some of the most comprehensive articles explaining the Decentralized Finance proposition. I really love the last one by Camilla Russo who walks us through her journey on testing DeFi solutions. I highly recommend you to subscribe to her eloquent blog about DeFi.

Decentralized Finance: An Emerging Alternative to the Global Financial System

The global financial system has created massive wealth, but its centralized nature means the spoils have gone to the people who are best connected to the financial centers of the world.

As global inequality continues to rise, how can wealth building tools become more accessible to the rest of the global population?

Luckily, technological developments and their rapid adoption make this the right time for a new decentralized financial system to emerge:

  • The Internet: 3.9 billion users by the end of 2018
  • The proliferation of smartphones: Two-thirds of the unbanked have mobile phones
  • Digital banking: over 2 billion users by end of 2018
  • Bitcoin and Blockchain: the emergence of new public blockchains

Today’s infographic comes to us from investment app Abra, and it highlights how public blockchains could help to enable a decentralized finance system.

What is Decentralized Finance?

Decentralized finance describes a new decentralized financial system... read more


Decentralized Finance Is a Continuum

A fintech VC’s case for the end of Industrial-era finance

Decentralized finance, otherwise known as DeFi, sits at the intersection of financial products and services with decentralized networks and open protocols. The implications of DeFi will be pronounced across both developed and emerging markets.

  • In developed markets, DeFi will provide greater choice to consumers, strip out costs from the legacy financial system, and bring greater liquidity and product innovation to capital markets.
  • In emerging and frontier markets, DeFi will provide a more secure store of value and bring banking-style services to the 1.7 billion adults who lack access to any formal financial system.

At FinTech Collective, we believe that DeFi will be an infinitely more durable phase of development and adoption for blockchain technology than anything we have seen to date. The financial services sector is at the dawn of a new era of network-based finance — an era characterized by transparent, trustless, secure, and programmable financial products.

Part I. DeFi — How Did We Arrive Here?

Since the inception of Industrial-era finance, the banking system in developed markets such as the U.S. has relied on a number of highly capitalized financial institutions, law firms, and regulatory bodies to serve as the foundational “trust layer.” Without a better alternative — and given that the financial services serves as the lifeblood for our economy, comprising nearly $4.1 trillion of our nation’s $20.5 trillion annual GDP — such a construct was needed to ensure against systemic risk... read more 


DeFi10 Part2: Becoming a Programmable Money Fund Manager

And four dapp myths the experiment helps clear.

Hello defiers! This is my DeFi10, Part 2. I’m running an experiment where I’m putting in an equal amount of money into 10 different decentralized finance protocols and tracking their performance throughout the year. Last week I invested in what will be the fund’s benchmark, MakerDAO’s DSR, and four other projects.

[Click here to read my DeFi10 Part 1: Lessons in Building a DeFi Portfolio]

This week, I invested in the other six.

I’m documenting here what the experience was for each project, and will periodically track their performance. At the end of the year, I will rank them based on metrics including, total return, some measure of risk-adjusted return, user interface, risk disclosures, and others. Given the highly dynamic nature of decentralized finance, which is barely two years old, it will be interesting to see if any of these projects will have failed, and how many new contenders will surely have emerged. Read the full article.