DeFi is the future of banking that humanity deserves

Decentralized finance is a form of finance that does not require traditional intermediaries such as banks, brokerages or exchanges. All of the work that would normally be handled by these institutions is instead performed by technological solutions including smart contracts and blockchain.

The legacy banking system and DeFi are markedly different. While traditional finance is slow to develop and adapt, in just a few years, companies operating in the DeFi sector have built a parallel financial system from the ground up. There are payment systems, lending protocols, exchanges and more. There is also a growing stablecoins market of fiat-pegged assets including Tether (USDT) and USD Coin (USDC).

Improved returns

One of the headline differences for DeFi is the potential returns on capital/savings that retail users can expect. The average bank interest rate for a checking account in the United States today is a mere 0.06%, and the average savings account offers only a marginally improved rate of 0.09%. Compare this with holding your money in a DeFi protocol such as Yearn.finance vaults, and you can expect to receive an 11.4% annual percentage yield on dollar-pegged stablecoins. From the perspective of financial return, DeFi beats traditional banking out of sight.

Slow to innovate

Another key factor propelling DeFi forward is its culture of innovation. The banking sector, on the other hand, is notoriously slow to adapt. Try to think of the major improvements that banks have delivered over the past few years, and you’ll probably draw a blank.

That’s not to say that banks haven’t delivered any innovations. In the last half-century, they’ve incorporated card payment technology, internet banking services, telephone banking and mobile apps. That’s not nothing, but it’s not a very long list either. You may think I’ve forgotten to include ATMs, but those date back to 1967, making that particular innovation more than a half-century old.

Lowering barriers

One of the key…

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