When asked where the next proving ground for DeFi will be, most people would probably say that Silicon Valley, Hong Kong, London or any other innovative high-tech hub would not have thought of a remote mountain village.
Maybe it's time for them to change their mind.
There is nothing wrong with increasing DeFi to become a global financial phenomenon. Within one year, DeFi's total market lockout value had jumped from US $ 631 million to over US $ 41 billion. Some decentralized trading platforms have monthly transaction volumes of tens of billions of dollars; Auto loan providers can now match loans in excess of 200 million dollars.
This kind of growth is simply incredible, if it weren't for the openness and transparency of the data in the chain, you might still find it odd. In the face of rapidly developing times, we can't help but think that the seeds of the DeFi revolution have taken root. As the founder of Gemini said: " Software is eating the world, and DeFi is software that is starting to eat up Wall Street ."
But is it true? There is no doubt that DeFi has grown exponentially and has attracted the interest of traditional banks and other financial practitioners, but DeFi is not yet a consumer movement.
OKCoin CEO Fang Hong told The Banker earlier this year: "This field is still in an experimental stage. I don't think we'll wake up tomorrow and see a bank, Nasdaq or Fidelity get killed. It's still a cutting-edge industry, and people who understand cryptocurrency technology will be interested. to her. "
Fang Hong's gaze summed up the heart of the matter quite succinctly. Cryptocurrency enthusiasts witness DeFi's development and growth and celebrate that it has the potential to achieve truly transparent, responsible and democratic management of funds. After seeing this madness, other consumers stick to traditional banking applications after they were a little surprised and confused.
High-tech centers may accept DeFi from an idealist perspective, but they lack actual needs. Yes, DeFi can allow anyone with a network connection and a smartphone to complete online payments, earn credit and other means of participating in the financial system, but in developed countries most people can already do it.
While DeFi could promote a more efficient, democratic and secure financial system that appeals to these consumers, it doesn't surprise them. In addition, as consumers' daily banking needs have been met by mature banking institutions, their motivation to store cryptocurrency or spend time understanding DeFi technology is limited.
If you add that DeFi is already facing major obstacles such as regulatory uncertainty and special usage scenarios, you can understand why DeFi is not yet the financial solution of choice for mature markets.
But what about emerging markets?
Let's think, who has a more practical need for a DeFi solution? Is it someone who is accustomed to using the banking system, or someone who doesn't even have a bank account?
According to a research report published by the World Bank, there are currently about 1.7 billion adults in the world who are unbanked, which means they do not have accounts with financial institutions or mobile payment providers. In addition, because the banking industry is very mature in high-income countries and is almost universal, most of the unbanked people live in developing countries. Currently, China is the country with the most unbanked adults (225 million), although the proportion of the population in India (190 million), Pakistan (100 million) and Indonesia (95 million) who do not have a bank account is also high. .
The consequences of not having access to financial services can be devastating. People without bank accounts can hardly transfer money or save safely; without cash, they cannot obtain loans or make purchases. Based on the report above, the most frequently cited obstacle to opening an account was insufficient funds. But the researchers point out that these consumers don't necessarily reject banking.
According to the researchers, "Globally, 30% of adults who don't have an account at a financial institution say they don't need an account. This is the second most common reason. However, only 3% consider it because they don't need one. The only one. the reason. "
This suggests that among those who do not need a bank account, some may be open to using financial services if those services are truly available and relevant to their lives.
The demand for unconventional banking services in developing countries far exceeds the demand in developed countries. If there is an intuitive interface and appropriate logical packaging, people and companies without bank accounts can help DeFi thrive.
Based on the status quo, the prices of mobile devices are getting lower, and the penetration rate is getting higher. Two thirds of those who do not have bank accounts own cell phones. In 2018, more than half (3.9 billion) people used the Internet, and 2 billion people managed their funds online. The infrastructure, interest, and demand for comprehensive digitization and blockchain security services are clearly in place, and the rest are DeFi builders to provide consumer-friendly solutions.
It should also be noted that introducing unconventional financial solutions to unbanked communities is not a new challenge, as there have been successful cases before. Take for example the M-Pesa expansion in Kenya. This mobile money system debuted in 2007, and the current penetration rate has reached 72%. Users can deposit or get cash via SMS without a smartphone or computer. These transactions are matched by a human agent who is at the designated location and the service method is similar to that of a self-service teller machine.
One Vox reporter concluded: "In countries where hardly anyone has a bank account or bank branch, agents mean you can get cash when you need it, and you can have a safe place to store it when you don't need it. , This is a big improvement. "
The benefits of the mobile money system have also been fully proven . A study conducted in 2016 found that people who live closer to mobile money agents are significantly less likely to be in poverty, let alone extreme poverty. Mobile money systems like M-Pesa are very different from decentralized applications (dapps). However, the project's massive success shows that unbanked consumers will flock to a convenient digital solution that meets their financial needs.
If we want DeFi to become a functional standard and create an effective blueprint, we need to stop paying attention to high-tech centers that already have banking solutions, and focus on the places where dapp support is needed. DeFi fans can promote innovation, but it's the consumers who really push new products to market. In that case, remote farming would be a much more fertile place for the DeFi revolution, and we only need to sow the "seeds".