DeFi is software that can increase economic access for everyone by making the digital economy fairer, more transparent and more equitable.
Increased Transparency: DeFi protocols increase operational transparency about the mechanics of market infrastructures and associated fees by using open-source software, which makes transactions more transparent and auditable by using blockchain-based records.
Equitable Market Access: DeFi protocols are open and available to anyone in the world with an internet connection, giving them the potential to significantly expand access to financial services.[1] That access empowers more people to use financial services without having to go through intermediaries that may prevent sectors of the market from participation, either through unavailability, absolute prohibitions, excessive pricing, or unfair or discriminatory treatment.
24/7/365 Liquidity: Users can access and use markets at all times of the day without the need for closing markets at the end of each day. Among other things, this eliminates the risk of capital dislocations due to illiquid aftermarket trading in traditional systems.
Lower Costs and Faster Settlement: DeFi protocols reduce friction and transaction costs for the creation, distribution, trading, and settlement of financial assets with faster settlement times for users.
Improved Security: Transactions using DeFi protocols are recorded on blockchains, the records of which cannot be manipulated or amended, offering greater security to users.
Greater Control: The absence of intermediaries in DeFi protocols provides individuals with the ability to custody their own assets, giving them greater control and certainty. Additionally, in some instances, market participants can directly develop community-governance standards.
Greater Uptime: Permissionless blockchains are operationally resilient (the Ethereum blockchain has never gone down), whereas traditional market infrastructures have had major technology failures, resulting in downtime for securities markets.
Elimination of Broker Risk: DeFi protocols have no employees to supervise, no financial risk for users from broker activity or custody, and no interaction between a broker and customers that could result in unlawful sales practices or other unfair and discriminatory dealing.
Elimination of Anti-Competitiveness: Users can easily move their self-custodied cryptocurrencies from one protocol to another at any time without significant friction, unlike the “siloed” experience in traditional financial services.
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