DeFi: Financial Services for Everyone

Pain points in centralized financial systems and current financial intermediation process offers valuable opportunities for disruptors. These systems fails to achieve the objectives of inclusive and sustainable economies as still 1.7 billion population of the world is unbanked. DeFi comes with a unique promise "Financial services for everyone". Though in Nascent phases the technology has true potential to become "internet of money". Defi an acronym for Decentralized finance is P2P framework where parties interact through a common or shared ledger. The unique value proposition of Defi is decentralized control which along with other features, i.e. permission less, open access and transparency can revolutionize the financial services completely. DeFi is based on Decentralized Applications (dApps) or protocols. By running these dApps on a blockchain, it provides a peer-to-peer financial network. DeFi can overcome some serious flows in current financial system.

1. High costs: Current centralized systems have several flows. One of them is high costs. Consider the examples of credit card interchange rate (usually 3% of value of the transaction) and remittance fees. DeFi can be potential solution of that. It can result in efficiency both in terms of speed and cost.
2. Transparency: Trust is the biggest aspect which modern financial institutions lacks. DeFi due to openness in nature can address the opacity and offer valuable solution for every stakeholder.
3. Economic Growth: Due to legacy costs in traditional financial institutions sometimes high quality entrepreneurial ideas fails to get funding. Initial coin offerings can prove a great source of funding for new entrepreneurs with valuable ideas.
4. Alleviate inequality: DeFi can lead to a more inclusive economy. Marginalized populations can have access to financial systems. Also it brings new opportunities for entrepreneurs.

In short, DeFi or Open Finance provide open solution to every financial service whether lending, saving, trading, insurance. It has potential to revolutionize the way we do financial transactions. Still, we need a www in this field. Although Ethereum is leading, Solana, Cosmas and Tezos are also giving tough fight.