Why DeFi Could Be a Game-Changer for Investing in Emerging Markets ??
DeFi or Decentralized Finance has been a buzzword in the world of finance for some time now. It is a novel concept that aims to provide financial services through decentralized protocols and applications built on top of blockchain technology. While DeFi has been mainly associated with developed markets, it can also benefit from investing in Emerging Markets. In this post, we will explore how. ??
What are Emerging Markets ?
Emerging Markets are economies that exist between the stages of developing and developed. During this phase, they experience their most rapid growth as well as their greatest volatility. One of the challenges faced by SMEs in Emerging Markets is accessing affordable credit. Banks in these markets have high lending rates, which makes it difficult for small businesses to access credit. ??
DeFi is currently facing challenges in generating substantial yield opportunities through popular protocols such as Aave and Compound. However, there is a potential solution that could address this issue. By providing access to Real World Asset (RWA) opportunities in emerging markets, investors could potentially attain high yields. ??
This approach could be a game-changer for DeFi as it presents an opportunity to diversify investment portfolios and expand the ecosystem. By accessing emerging market opportunities, investors can potentially benefit from high returns and mitigate risks associated with traditional investments. ???
The integration of RWA opportunities in DeFi protocols has the potential to drive growth and promote financial inclusion for underbanked communities. This can be achieved by providing a decentralized platform for investors to access RWA opportunities that were previously inaccessible. ?
Investing in Emerging Markets through DeFi also provides diversification benefits. According to a 麦肯锡 report, there is a low correlation between Developed Markets and Emerging Markets. This means that Developed Markets and Emerging Markets do not behave similarly to each other and can potentially provide portfolio diversification. ??
Goldfinch , a DeFi protocol, has already found ways to provide access to private credit loans in Emerging Markets. However, traditional market private loan financing numbers are still exponentially higher than the DeFi markets in every region. Nonetheless, this presents an opportunity for DeFi to grow by investing in Emerging Markets. ??
As the world continues to move towards a more decentralized and transparent financial system, the rise of DeFi or Decentralized Finance has been gaining momentum in recent years. While the traditional market private loan financing numbers still remain exponentially higher than the DeFi markets in every region, there is no doubt that DeFi is slowly but surely making its way into the mainstream financial world. ??
One of the most interesting aspects of the DeFi market is its potential for growth in emerging markets such as Brazil, India, Indonesia, and Malaysia. These countries have huge populations and growing economies, making them perfect candidates for decentralized financial systems.
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In India, for example, the total DeFi loan originated is $81.4 million, compared to the traditional market private loan financing market cap of $492 billion. With a population of over 1.3 billion people, India has one of the largest unbanked populations in the world. This makes it an ideal market for DeFi to flourish and provide financial services to those who have been left out of the traditional banking system. ??
In Indonesia and Malaysia, the DeFi market is still in its infancy, with a total loan originated of $2.6 million and $2.5 million respectively. However, both countries have growing economies and populations, making them promising markets for the development of DeFi. ??
Investing in emerging markets is always a risky proposition, but the potential rewards can be significant. With the rise of DeFi and its potential to disrupt the traditional financial system, investing in these markets could pay off in the long run. By providing financial services to those who have been left out of the traditional banking system, DeFi can help to promote financial inclusion and economic growth in these countries. ??
Zoth is one such platform that allows investors to earn higher yields on-chain through Emerging Markets. By investing in Zoth, investors can access these high-yielding Emerging Market opportunities. ??
DeFi has the potential to benefit from investing in Emerging Markets. Investing in Emerging Markets provides diversification benefits, making it an attractive investment opportunity. If you're interested in earning higher yields through Emerging Markets, check out ZOTH and stay informed on the latest developments in DeFi and be ahead of the curve. ?
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