Apr 17, 2021 - Economy

Decentralize everything (in finance)

broken dollar

Illustration: Aïda Amer/Axios

While exchanges like Coinbase and FTX are amassing huge success, another crypto industry phenomenon that’s flourishing is “DeFi,” short for “decentralized finance.”

What's happening: A crop of protocols that let participants execute various transactions directly with each other through the networks instead of using intermediaries has been exploding in popularity.

What they're saying: “The system as it exists today is still very inefficient,” said FinTech Collective principal Sean Lippel.

  • “DeFi flips the whole thing on its head and says ‘we don't’ need these intermediaries, let’s use the power of the blockchain to coordinate this,” Lippel added.

The key applications to watch, according to investors:

  • Borrowing and lending
  • Trading assets
  • Synthetics
  • Stablecoins

Yes, but: There’s still some healthy skepticism.

  • “I don’t think that everything is gonna move to DeFi, but I do think that there’s a world in which 10% of it does,” FTX CEO Sam Bankman-Fried, whose company also built a decentralized exchange, told Axios.
  • “I also don’t think it’s automatic that it’s going to happen. … Decentralized systems are only going to take off if they’re really good products," Bankman-Fried said.
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