How DeFi decentralized finance paves the way for financial inclusion
According to World Bank Report since 2017, around 1.7 billion people around the world do not have a bank account today. Not having access to this fundamental financial instrument is the main factor preventing them from performing certain day-to-day functions. However, Decentralized Finance (DeFi) was created to meet all the demands and demands of traditional banking – security, privacy and accessibility – in a new way.
By moving financial transactions to the blockchain, people will only need a smartphone or laptop and a stable internet connection to access the global financial system 24/7. How’s that for a step in the right direction?
In this article, you’ll find out how today’s global financial inclusion works, what DeFi is, why it’s the best choice for both bank and unbanked people to manage their money, and how you can start investing in the space. .
The current state of financial inclusion around the world
Individuals and businesses who are financially included have access to financial goods and services that meet their needs – transactions, payments, savings, credit, and insurance – offered by large institutions with all their advantages and disadvantages.
Access to a bank account in the current financial system is the first step towards economic development since it allows people to store their money securely. However, the most crucial function of a bank account is to be the portal to other financial services.
For countries where 80% or more of the population has bank accounts, the next phase is to move from accessing the account to using the account (China, Kenya, India and Thailand). These countries depended on reforms, private sector innovation and a willingness to create low-cost accounts, including mobile and digital payments.
Everyone needs non-custodial financial services
The top four reasons people can’t have a bank account are:
- Lack of access to banks / cell phone nearby
- Minimum balance charge
- Distrust of the banking system
- No access to government issued IDs
Unbanked needs DeFi now
These four causes are still valid in developing countries. Most people who need financial tools (a loan, for example) usually get this money from friends or family simply because banking requirements are inaccessible.
The lack of long-term financial system policies ensuring digital and physical infrastructure to attract investment in telecommunications and banking makes opening and maintaining a bank account a scenario for a fiction film in countries in development.
However, it’s not all that rosy in the developed world either. For example, the Estimated Federal Reserve in 2019, that around 63 million people do not have a bank account.
Therefore, unbanked people in every country of the world are in desperate need of a much simpler, safer and more private financial alternative. Decentralized finance is the best answer to allow anyone to access a DeFi Wallet 24/7.
Banked people also need DeFi
According to MyBankTracker, here are the top 10 most common banking complaints:
- Excessive / hidden fees
- Bad customer service
- Bounce essential check / fund
- Expensive debits billed first
- Loyalty doesn’t mean anything
- Mortgage / loan issues
- Huge errors / mistakes
- Bad experiences in branch
- Difficult for small businesses
- Fail to keep promises.
As you can see, people are complaining because they want to have minimally fair conditions to manage their money transparently and securely. Unfortunately, however, banks have often failed to provide such guarantees.
On average, compared to others, bankers are more likely to discover the different decentralized finance platforms that currently exist on the market and therefore be encouraged to use them for their financial transactions despite the UX difficulties that exist today.
In other words, most of the people who currently use traditional financial services around the world are unhappy with their banks’ financial tools, making them a vital industry that also needs DeFi services to manage their money. more secure and private way.
But what is DeFi? How can we start investing in the DeFi sector now? Read on to find out.
What is decentralized finance (DeFi)?
Decentralized Finance (DeFi) is a type of blockchain-based financing that uses smart contracts on blockchains, the most common of which is Ethereum based on ERC20 tokens, to provide traditional financial instruments instead of relying on central financial intermediaries such as banks.
People can use decentralized financial platforms to lend or borrow money from others, trade cryptocurrencies, insure against risk, and earn income in savings accounts.
This financial sector was born in 2009 with the creation of bitcoin. Then ICOs, which were one of Ethereum’s first major use cases, became popular in 2017.
Since 2018, concepts such as âcash extraction poolsâ and âautomated market makersâ have been introduced, which has led many DeFi initiatives to develop new tools such as guaranteed loans, borrowing and yield agriculture, among others.
On the other hand, even though decentralized finance became popular in 2020, making Ethereum the only blockchain supporting DeFi tools, many cheaper and faster alternatives have emerged since then (e.g. Binance Smart Chain). . Nowadays, these two blockchains are the most used networks to develop DeFi initiatives.
However, people all over the world do not have access to this revolutionary technology in numbers that we would like. That’s why Eidoo’s non-custodial wallet is the perfect way to get on board.
Why Eidoo Wallet is the best way to get started in DeFi
Eidoo is a non-custodial multi-asset wallet that allows users around the world to manage over 500 ERC20, Litecoin and Bitcoin tokens in a secure and private way, with in-app integration with different DeFi protocols to invest directly as per example Compound, AVEE, Uniswap, Balancer and Curve finance, among others.
With the Eidoo non-custodial wallet, you can store, swap and swap ERC20 tokens, avoiding potential risks and unnecessary costs incurred by internal intermediaries. In addition, there are other DeFi services built into the app such as:
- NFT Manager: Platform inside the Eidoo wallet where you can view your NFT collectibles.
- DAO Manager: For PNT holders, you can manage your pNetwork DAO votes on this platform.
- Fast SEPA Transfer: You can buy ERC20 tokens with SEPA transfers in hours instead of days.
- eidooCARD: Decentralized payment service based on a Layer-2 solution supported by VISA and connected to Eidoo DeFi Wallet. This encrypted card is therefore more profitable.
The non-custodial crypto ecosystem makes a wide range of financial instruments more accessible to everyone. Now is the time to seize these opportunities and make the most of them.