When your money is broken, everything else follows. It’s a truth we feel keenly in the little moments, from deciding whether to buy that extra pair of shoes to calculating how far a paycheck might stretch.
Will Canny, a finance reporter at CoinDesk, recently broke down what’s really driving DeFi; blockchain’s most widely used application, particularly in the U.S. I’ll extend this to the West in general. Because, as it happens, the DeFi market is still largely USD-centric. That makes interest rates a deciding factor in whether DeFi platforms thrive or flounder.
In a high-interest-rate environment, people tend to park their money in traditional savings or investments for higher returns. But the moment interest rates drop, their returns go with it. Suddenly, stablecoins and DeFi services start looking attractive again, with their higher yields through staking, lending, or liquidity provision. It’s a bit ironic: old finance drives new finance. And now, with the rise of real-world assets (RWA) onchain, demand for financial products like DeFi is surging.
For us in Africa, DeFi is about doing pragmatic things; making microfinance more accessible and efficient, supporting entrepreneurial activities driving much of our economic growth, reducing the cost and friction of sending money across borders in our remittance-heavy economy. For many, DeFi is helping meet basic needs: paying bills, saving with a bit of return, borrowing at fair rates, or sending money to family. It’s not just financial innovation; it’s tangible impact.
As the co-founder of the Sui network put it, “The internet today does an amazing job at moving data around, but when it comes to transferring value or intent, it falls short.” Think about that: if I want to send you money, we’re stuck with a maze of different protocols, none of which give us real control over our funds.
That’s where DeFi comes in. It’s not just here to patch the cracks in traditional finance; it’s about building something entirely new; a financial system independent of the old rules and barriers.
Now, think about this:
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DeFi is defined by its open, permissionless access. Anyone with a crypto wallet and an internet connection can access DeFi applications, free from the constraints of geography and sometimes even without a minimum balance. It’s finance stripped of the usual barriers.
For small and medium-sized enterprises (SMEs), especially across Africa, DeFi is unlocking a level playing field where traditional finance falls short. Imagine: instead of being bound by a limited local economy, businesses here can accept crypto payments and spend them almost as easily as cash. And when they offer crypto payment options, they’re suddenly reaching a global, crypto-savvy clientele. There’s a psychological shift, too—people are often more willing to spend digital currencies because they feel less tied to old-school savings habits. So for businesses, DeFi is more than just a hedge against crises; it’s a long-term strategy for growth, new markets, and future currency models.
DeFi’s breakthrough lies in using crypto assets in ways fiat can’t match. Decentralized exchanges, synthetic assets, and flash loans (allowing instant borrowing without collateral) are novel applications that only exist in this blockchain world.
In the end, DeFi offers a massive opportunity; a real chance to bring millions into the future of finance. It’s a practical solution for real lives, from Lagos to London. That’s decentralized money, sound money, and a future where financial systems work for everyone.
Nancy Muorah
