Before we get there, why finance in the first place? Before any currency ever existed, bartering existed. I raised chickens, you grew wheat. I give you chickens, you give me wheat. One year, I didn’t do so great with my chickens, but I still need wheat, I offer you more chickens next year. I owe you (IOU). Now perhaps you don’t need more chickens, but your neighbor wanted the chickens, so you can trade the IOU for something else. In its most basic form, that is all currency is, standardized IOU’s that anyone willing to accept it agrees is worth an established value. And eventually we started measuring everything denominated in these IOU’s.

So now I have a bunch of IOU’s, and I start being worried that I might get robbed, I need a safer more secure place to store the IOU’s. And so the first banks are formed (originally churches storing a ledger of these IOU’s).

A well respected man in the community, wishes to start raising cows, he asks the church to borrow him some of those IOU’s so that he can start his farm. The church agrees but he needs to pay back more IOU’s than he borrows when he can, this is the interest he needs to pay. And to protect the IOU’s, the man needs to give the deed to the land he buys as collateral. The community storing their IOU’s at the bank are grateful, since now they have more IOU’s, the well respected man is grateful, since it empowered him to start his business.

Finance at its core, has always been about empowering and putting idle assets to work. At some point, thanks to fraud, crime, and an evolving society, it became harder and harder to judge if the one asking for money was a “well respected man”. In today’s near dystopian world we are all reduced to a credit score. A number that decides if we are a good financial candidate. If you are new to the system, you are what is called a “thin file” in credit bureau terms, it means there is insufficient data to judge you, it means you are very unlikely to receive a loan, and if you do qualify, it will have horrible rates. You also need to have an existing relationship.

And this brings us back to why defi. Defi doesn’t care, Defi doesn’t judge. Everyone is treated the same based on the rules of the system, and the rules are public and transparent for everyone to see. Got your home-loan declined from a traditional bank? You probably don’t even know why. Loan declined in Defi? You know exactly why.

Interest (or yield) on lending is, apart from labour and goods, one of the purest forms of income. There will always be those that need capital to start a new venture, or those that have hard times and just need some help bridging the winter. This type of income is infinitely scalable and pure, it does not rely on any fake incentives, it does not rely on any external factors, it is a simple supply and demand business.

The next form is bartering, going back to our first paragraph, I have chickens, you have wheat. In today’s interconnected world bartering is still a core of everyday businesses, but it might be hard to find a counter party, or it might be hard to find what you are looking for. This is why general market places started to exist, a place where everyone can come together one day a week and sell and barter their goods. An AMM is a bartering platform, and just like at a market place where you had to pay a small fee to be able to sell your goods, with an AMM the providers claim a small fee. Again, this is a pure form of income (or yield). As long as there are people willing to sell and willing to buy, infinitely scalable.

In Defi, you don’t need to be an accredited investor to be able to participate in this marketplace, you don’t need to live in New York, you don’t need to work at Wall Street, there are also no dodgy behind the door deals, or brokers, what you see is exactly what you get.

Looking at the top 7 biggest industries we have;

1. Life & Health Insurance
2. Oil & Gas
3. Real Estate
4. Pension Funds
5. Car & Automobile Sales
6. Direct Insurance
7. Commercial Banks

These are the biggest industries in globally even though most people aren’t allowed to participate, defi removes all that and anyone willing to try can participate. It is probably the single most important building block for any growing economy. Everything else roots off of it. Trade and lending are keystone to all the above.

Sure, there are bastardizations of it, that is flooded by fake incentives, bloated yield, unsustainable income, but that’s true for traditional or decentralized versions. That in itself does not inherently remove the beauty of pure, transparent, and completely democratized access.

Defi is the core building blocks for a decentralized society, it is merely the start, and there is so much more to come. Until all of those above 7 industries are on-chain, freely accessible, transparent, and open access to everyone, we all have more work to do.

All humanitarian efforts happen when we as a collective have enough to share. And enough to share can only happen with defi.

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