With Ethereum and DeFi we have something that we’ve never had before - the ability to completely decentralize the financial system and level the playing field for every single human being on Earth. This is a fundamental shift in how finance works and I strongly believe that the infrastructure that we build today will transform finance for decades to come.
I’m sure you’ve all been following the GME and /r/WallStreetBets story and how the incumbents/large funds are “fighting back” against the retail investors who short-squeezed them. One tactic that was used to try and protect these incumbents was that companies like the TD Ameritrade placed restrictions on trading of GME. Imagine that - these centralized companies can basically dictate to you what you can and can’t trade and will happily protect their billionaire friends when it suits them to.
Now, take DeFi on Ethereum - no one can shut down truly decentralized protocols such as Uniswap and no one can tell you what you can and can’t do with your money. Everyone is on a level playing field whether you’re a billionaire or only have a few hundred dollars to your name. This type of freedom is something many of us DeFi-natives now take for granted as we’re so used to it but it is a monumental shift in how finance has been done for most of human history. What started with Bitcoin in the form of a decentralized money is now being continued by Ethereum with ETH as programmable money and DeFi as a decentralized finance stack.
The building blocks of this new financial stack are being laid out right before our eyes. Decentralized exchanges, on-chain money markets, stablecoins, yield aggregators and more. It’s not just 1 or 2 solutions either - we are seeing an explosion of products come to market with many of them not even possible to build in the traditional finance space. This allows for rapid experimentation and iteration as 1 month of DeFi innovation is equal to many years of innovation in TradFi. Yes, a lot of DeFi apps are still clunky, expensive to use and inefficient today but the ability to rapidly develop and iterative in an open way means that these problems will only take a few short years to solve - not decades.
There’s still a long way to go for Ethereum before we can scale up DeFi to service the entire world but we’re already seeing the foundations being laid with various layer 2 solutions going live, the first phase of eth2 being live with others rolling out soon, more capital entering the system every day and innovation running wild across the entire ecosystem. With these powers in tow, we’re going to eradicate as many of the centralized incumbents as we can and build a better financial world for both current and future generations.
Have a great day everyone,
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All information presented above is for educational purposes only and should not be taken as investment advice.