DeFi: Is Anyone Really Using It?

Supposedly, decentralized finance is the fiat and traditional banking system disruptor. Who’s using it? Are you?

Crypto investors may be buying the coins of the big DeFi players. But ask them if they have ever used it to borrow or send money to someone, and they will likely say no.

Numerous DeFi platforms were created to lend in stablecoins backed by fiat. As investments, they have suffered the crypto winter. Maker
MKR
started the year at $2,355 and is now $704. Aave began to 2022 at $258. It’s now $85.

The global DeFi ecosystem reached a high of $183 billion in November 2021, so this is no slouch of a sector in the cryptocurrency/blockchain space. For sure, hardcore crypto fans believe DeFi will render traditional finance obsolete in their very closed world, at least for them.

The reality is that most people have never heard of or used DeFi. Investors own the tokens, but don’t use the service. Everyone interviewed for this article agrees that DeFi lacks accessibility, has a lackluster user experience and often comes with high gas fees (think of it as a transaction charge). This, coupled with the learning curve itself, means many potential users who like cryptocurrency stay away from DeFi services.

More importantly, what’s so great about sending someone Stellar
XLM
lumens through its own blockchain instead of dollars through Western Union
WU
(which allows for bitcoin transfers)?

Well, it’s the fees, of course. Sending Lumens is cheaper. Then if you want dollars, you have to transfer it to dollars, and there is often a fee there. People will use the brands they know to transfer money to one another. If Venmo and CashApp allow for bitcoin transfers, who needs Maker coins in real life? Investors can get interest for those coins, which is fine, but 10% yield on a coin that lost 80% of its value is not all that interesting.

All told, being able to get around government-issued money sounds like a good idea. Especially in a world where the programmable currency is being discussed at central banks in the creation of a central bank digital currencies (CBDC). Adding political censure to the mix and being able to hide from the “powers that be” who can shut your bank account down sounds all too attractive. Everyone in the crypto world wants DeFi to work. Everyone who has had it with centralized political power should also want it to work. DeFi has the wind at its back, as an idea.

What will it take to make the idea adoptable?

“The…