{"id":167271,"date":"2021-01-31T10:18:00","date_gmt":"2021-01-31T07:18:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/defi-is-the-future-of-banking-that-humanity-deserves\/"},"modified":"2021-01-31T10:18:00","modified_gmt":"2021-01-31T07:18:00","slug":"defi-is-the-future-of-banking-that-humanity-deserves","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/defi-is-the-future-of-banking-that-humanity-deserves\/","title":{"rendered":"# DeFi is the future of banking that humanity deserves"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3de4146b3d6\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3de4146b3d6\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-is-the-future-of-banking-that-humanity-deserves\/#Improved_returns\" >Improved returns<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-is-the-future-of-banking-that-humanity-deserves\/#Slow_to_innovate\" >Slow to innovate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-is-the-future-of-banking-that-humanity-deserves\/#Lowering_barriers\" >Lowering barriers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-is-the-future-of-banking-that-humanity-deserves\/#More_to_do\" >More to do<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-is-the-future-of-banking-that-humanity-deserves\/#Distrust_and_resentment\" >Distrust and resentment<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># DeFi is the future of banking that humanity deserves <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDEvODlkZmI1MzgtZGNmYy00NzY5LWE2ZDQtMmU2NzkyZjg1ZGExLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a136f3a>Decentralized finance is a form of finance that does not require traditional inter<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>ries such as banks, brokerages or exchanges. All of the work that would normally be handled by these institutions is instead performed by technological solutions including smart contracts and blockchain.<\/p>\n<p>The legacy banking system and DeFi are markedly different. While traditional finance is slow to develop and adapt, in just a few years, companies operating in the DeFi sector have built a parallel financial system from the ground up. There are payment systems, lending protocols, exchanges and more. There is also a growing stablecoins market of fiat-pegged assets including Tether (USDT) and USD Coin (USDC).<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Improved_returns\"><\/span>Improved returns<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>One of the headline differences for DeFi is the potential returns on capital\/savings that retail users can expect. The average bank interest rate for a checking account in the United States today is a <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.valuepenguin.com\/banking\/average-bank-interest-rates\">mere<\/a> 0.06%, and the average savings account offers only a marginally improved rate of 0.09%. Compare this with holding your money in a DeFi protocol such as Yearn.finance vaults, and you can expect to receive an 11.4% annual percentage yield on dollar-pegged stablecoins. From the perspective of financial return, DeFi beats traditional banking out of sight.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Slow_to_innovate\"><\/span>Slow to innovate<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Another key factor propelling DeFi forward is its culture of innovation. The banking sector, on the other hand, is notoriously slow to adapt. Try to think of the major improvements that banks have delivered over the past few years, and you\u2019ll probably draw a blank.<\/p>\n<p>That\u2019s not to say that banks haven\u2019t delivered any innovations. In the last half-century, they\u2019ve incorporated card payment <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a>, internet banking services, telephone banking and mobile <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>s. That\u2019s not nothing, but it\u2019s not a very long list either. You may think I\u2019ve forgotten to include ATMs, but those date back to 1967, making that particular innovation more than a half-century old.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Lowering_barriers\"><\/span>Lowering barriers<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>One of the key differences between legacy banks and DeFi is in how and where they lower barriers. Decentralized finance is focused on lowering barriers for consumers, making banking more inclusive and available to all. At the same time, brick-and-mortar banks are closing down branches in an attempt to save money. In the past five years, 3,500 high-street banks have permanently <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.dailymail.co.uk\/news\/article-8788949\/TSB-axe-900-jobs-close-164-high-street-bank-branches.html\">closed<\/a> their doors in the United Kingdom, a number that equates to roughly 55 per month.<\/p>\n<p>With in-person banking being eroded by the banks themselves, they have evened the competitive landscape for DeFi to compete. While DeFi attempts to lower barriers for consumers, the legacy banking system has unintentionally lowered the barriers to competition. As Bill Gates said in 1994: \u201cBanking is necessary; banks are not.\u201d Nobody has taken this more to heart than the legacy banking system.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"More_to_do\"><\/span>More to do<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Although DeFi has made great progress in recent years \u2014 with 2020, in particular, being a standout for the sector \u2014 there is still a huge amount of work to be done. One of the biggest sticking points for the industry is that it has largely been reliant upon the Ethereum blockchain. Last year, as the popularity of DeFi grew, transaction speeds slowed to a crawl while transaction fees rose.<\/p>\n<p>There are some emerging players reaching critical mass at just the right moment to offer an alternative. Polkadot in particular is often touted as a contender for Ethereum\u2019s crown, with a host of developers now working on products for the network. In the 12 months ending with the second quarter of 2020, Polkadot\u2019s \u201cnext-generation network\u201d <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/outlierventures.io\/research\/blockchain-developer-report-q2-2020\/\">witnessed<\/a> a 44% rise in active developers. With over 250 projects now building on Polkadot, it is likely that the upstart could take a significant slice of the DeFi pie. At the same time, there are projects attempting to mitigate Ethereum\u2019s growing pains with sidechain solutions.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Distrust_and_resentment\"><\/span>Distrust and resentment<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The decision of governments to bail out private banks with public money may have kept banking institutions afloat after the financial crisis, but resentment for the failure still bubbles just beneath the surface. That crisis is also intimately tied to the story of Bitcoin (BTC) and decentralized money, as Bitcoin\u2019s genesis block bore the inscription: \u201cThe Times 03\/Jan\/2009 Chancellor on brink of second bailout for banks.\u201d<\/p>\n<p>A DeFi protocol is only as good as the person who programs it. There have been a number of high-profile exploits and hacks of DeFi protocols, which has highlighted weaknesses in the sector. With growth showing no signs of slowing down, it\u2019s clear that the future of banking and financial innovation belongs to decentralization.<\/p>\n<p class=\"post-content__disclaimer\"><em>This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.<\/em><\/p>\n<p class=\"post-content__disclaimer\"><em>The views, thoughts and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.<\/em><\/p>\n<div>\n<div style=\"background: rgb(239, 239, 239); border: 1px solid rgb(204, 204, 204); padding: 10px;\"><strong>Ilia Maksimenka<\/strong> is the founder and CEO of PlasmaPay, a global, digital payments platform enabling seamless entry into decentralized finance. Prior to creating the Plasma Alliance Group in 2017, Ilia founded Edster, one of Russia\u2019s earliest e-learning platforms and an online portal for over 10,000 universities and schools, and later went on to become head of international business development at open online education platform Coursmos in 2016. Ilia was awarded a Master of Economics from Plekhanov Russian University of Economics and a certification in business management from McGill University.<\/div>\n<\/div>\n<p><template data-name=\"subscription_form\" data-type=\"defi_newsletter\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/defi-is-the-future-of-banking-that-humanity-deserves\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# DeFi is the future of banking that humanity deserves &#8221; Decentralized finance is a form of finance that does not require traditional intermediaries such as banks, brokerages or exchanges. All of the work that would normally be handled by these institutions is instead performed by technological solutions including smart contracts and blockchain. The legacy&#8230;<\/p>\n","protected":false},"author":1,"featured_media":167272,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDEvODlkZmI1MzgtZGNmYy00NzY5LWE2ZDQtMmU2NzkyZjg1ZGExLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74888,74894,74983,74868,74891,75238,75356,71939,4965],"class_list":["post-167271","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-banking","tag-blockchain","tag-decentralization","tag-defi","tag-ethereum","tag-financial-services","tag-future-of-money","tag-banks","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/167271","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=167271"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/167271\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/167272"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=167271"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=167271"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=167271"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}