De-Fi: Next Generation of Financial services for All
De-Fi: Next Generation of Financial services for All

De-Fi: Next Generation of Financial services for All

by Bernardt Vogel

Thesis Statement

The Foundation for the next generation of financial services will be the commoditization of payments & value Storage, financial Inclusion, digital goods & marketplaces and broad tokenization of real-world assets. I want to partner with early stage founders with a genuine ambitions to create a better, faster, cheaper, more open financial system to raise economic prosperity through a frictionless exchange of value in North & Latin America.

Personal Background

Being raised in a country with unparalleled natural beauty but sadly one that is also struggling to overcome extreme poverty. After years of ignoring the un-prosperous living standards of people in my country started to affect me.

I have always been fond of finding new avenues to tackle traditional problems. Working in some of the poorest corners of the world's most underdeveloped countries, the poor Village of el Rama in the eastern coast of Nicaragua or in Arbegona located south of Addis Ababa in Ethiopia.

I have found a universal similarity, the individuals that inhabit these areas have all been denied a choice and opportunity, whether it’s a lack of food, water, healthcare, education or financial services, leaving them powerless to make changes.

Context: How I developed conviction towards this thesis
  • Coming from a family of immigrants; my family immigrated from Nicaragua to the United States
  • In the U.S., when we talk about immigrants achieving “the American Dream.” , we hear Immigrants success stories abound with people like Elon Musk, Tim Duncan, Sergei Brin.
  • These stories are incredible and important, but also overshadow the challenges of being an immigrant, leaving all behind and diving into the unknown.
  • Being an immigrant is tough! One has to navigate a complicated healthcare system, build up credit from scratch, undergo bureaucracy to become a citizen, etc.
  • All with the hope of a better future and the hope of being able to financially sustain there loved ones left behind.

Ever since I was a kid, I would love spending time on the internet and learning new things, reading interesting articles, discovering useful websites and reading opinions and habits of successful entrepreneurs. I would spend numerous hours with my father in law who was the Chairman of all Banking Regulations for Nicaragua, who explained the legal impediments to make banking digital and more accesible.

This challenges he would mention ended at my country’s border. I started to study crypto, take courses, which led me to invest in it, initially started gaining interest and after 8 months of reading crypto books & networking with individuals of similar interest, I had made the decision that borders don’t define me. I flew to Panama, and created a small USD250k fund, 1.5 years later it grew to USD2M mainly focused on investing in blue chip assets, yield farming & flash loans to capitalize on arbitrage opportunities.

See Exhibit I.(Fund strategy)

Suppose the effective exchange rate for 1,000 DAI for ETH on Uniswap is 6 ETH/1,000 DAI. (The instantaneous exchange rate would be different, due to slippage.) Also, suppose the dYdX DEX has a spot ask price of 5 ETH for 1,000 DAI (i.e., the ETH are much more expensive on dYdX than Uniswap). To capitalize on this arbitrage opportunity, without any capital beyond the gas fee, an investor can execute a flash loan to borrow 1,000 DAI, exchange it on Uniswap for 6 ETH, and use 5 of those ETH to trade for 1,000 DAI on dYdX. Finally, the investor can repay the flash loan with the 1,000 DAI and pocket the 1 ETH profit. This all happens in a single transaction; multiple contract executions can happen in a single transaction on the Ethereum blockchain.

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To that date, my experience with digital assets has been extremely rewarding and productive. However, it is through strategy & innovation that I can use my analytical aptitude and creative problem-solving skills to their fullest. I have a firm belief that I can make important contributions to whatever I collaborate with. I strongly believe in viewing problems not only from the standpoint but also from a marketplace, and the “think out of the box” point of view.

💰
I deeply respect startups working to alleviate these hurdles for immigrants, minorities and under-represented communities.
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🔞
(1)Immigrants & US=Symbiotic Relationship. 🌏  (2)When I hear unbanked = I see untapped 🚧 (3) When I hear underdeveloped region = I think Greenfield, first mover’s advantage.
  • Immigrants are responsible for substantial economic growth in the US, contributing $2 trillion to US GDP in 2015.
  • More than half of American startup companies valued at $1 billion or more were founded by first-generation immigrants.
  • 48% of Fortune 500 companies were founded by first-generation immigrants or their children.
  • During the 2015–16 academic year, international students contributed almost $33 billion to the US economy, and supported more than 400,000 jobs.
  • 40% of the Nobel Prizes won by Americans in chemistry, medicine, and physics since 2000 were awarded to first-generation immigrants, and 42% of the researchers at the top seven US cancer research centers are foreign-born.

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Decentralized Finance

Introduction

Decentralized Finance(DeFi) is a fully open financial ecosystem that uses blockchain-powered smart contracts to enable the provisioning of services such as loans, trading, asset management, and payments without depending on centralized entities like banks and brokerages.

It holds a promise to provide financial services, even for the unbanked, from any location, 24/7 and at lower costs, higher speed & the elimination of intermediaries.

  • Transparency: All the transactions on DeFi are transparent to everyone on the network, which builds authenticity, trust, and security.
  • Composability: The flexibility of DeFi ecosystem allows the building of new applications by different product offerings. For instance, stable-coins can be combined with prediction markets.
  • Immutability: The data added on smart contracts are permanent, indestructible, and unalterable making the financial transactions secure and easily auditable.
  • Programmability: Smart contracts that enable DeFi are highly programmable, enabling automatic execution and development of digital assets and new financial products.
  • Interoperability: The use of interconnected software programs allows compatibility of DeFi applications to integrate and complement each other over multiple blockchains.

Key Findings

DeFi stepped into the limelight as a new investment tool to utilize crypto assets. Its mentions are on the rise across print media, social media, and company filings of banks and other enterprises to offer DeFi services. DeFi promises to transform traditional finance into transparent protocols without middlemen via blockchain-powered smart contracts. It aims to tackle dissatisfaction in the financial ecosystem by influencing the speed and cost of transactions. Venture capitalists (VCs) are quick to react to the booming DeFi economy by lavishly investing in high-potential startups that target to rapidly broaden DeFi service offerings. While startups push the envelope for innovative DeFi applications beyond financial services to industries such as e-commerce, the focus of enterprises is on merging DeFi offerings with their existing portfolio. There has been significant growth in patent filings and grants during 2017-2019 was fueled by the US in countries and financial services in applications. Giants like Siemens filing patents in DeFi, such as smart contract-based ordering of medical procedures endorses the technology potential. The future of DeFi pins hope on the regulatory framework and emerging concepts such as non-fungible tokens (NFTs) and DeFi Intelligence (DeFi+AI), as well as evolving use cases in major industries like healthcare and energy.

Key Differences between DeFi & Traditional Finance

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DeFi has increasing real-world applications with its core use case being at the nexus of financial services across domains.

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DeFi fights traditional finance as its industry use cases push forward

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Startups are the torch-bearers for DeFi penetration across industries

Establishing DeFi platforms for lending and borrowing of crypto assets, crypto wallets, and decentralized exchanges for P2P transactions. With many corporate giants now venturing the space.

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Traditional banks and other financial institutions are entering or expanding into DeFi to make crypto-based services a future norm

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Trends

Key Factors driving the interest towards DeFi:

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The challenges of traditional finance, with intermediaries, high entry barriers & exclusion have been the main catalist of these movements.

DeFi allows any individual to buy, sell, lend, and borrow to interact peer-to-peer (P2P) by removing intermediaries.

DeFi serves as an alternative to banks for the underserved and unbanked populations by giving access to financial instruments like loans.

DeFi is built on decentralized blockchain networks so that the information is spread across multiple nodes on thousands of computers via a P2P network.

DeFi enables censorship resistance, every user has self-custody of their assets regardless of credit history or social standing.

Major Milestones

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The EU’s GDPR has created a domino effect to introduce data protection legislation across the world aimed at regulating the influence of big tech

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Crypto’s transformation from speculative investment to a potential currency or an asset class is essential for token-based economics of web 3.0
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DeFi: Market Value & Volume

Since September 2020, DeFi witnessed a whopping 816% growth to register $78.8 billion in its TVL by the end of September 2021, which could be primarily attributed to the growing pace in transition to more attractive financial products like yield farming*.

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TVL is a popular metric to quantify DeFi growth, which represents the total dollar value locked in DeFi applications such as lending, decentralized exchanges (DEXs), stablecoins, derivatives, and insurance. Lending accounts for nearly half of the TVL in DeFi.

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Ecosystem Map & Major Segments

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Drivers & Challenges

NFT craze coupled with supportive regulatory policies would drive DeFi adoption

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  • Integration of fast-rising digital tokens like NFTs and supportive regulatory frameworks would be a key factor for the large-scale adoption of DeFi. The composability of DeFi helps gives an innovative edge for penetration into new domains.
  • World Economic Forum published a policy-maker toolkit on DeFi to assist governments in shaping regulations of digital asset marketplaces.
  • Complex user interfaces and risks of hacking may stall the adoption of DeFi among traditional investors.
  • Risk of hacking or fraud pose the greatest challenge to DeFi
  • The performance of the entire DeFi market is very heavily influenced by the price of Bitcoin

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Latin America

Macroeconomic data points

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+1T USD deposits in cash and CDs from individuals in LATAMs Banks losing to inflation.
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Argentina +80% inflation rate and 100% YoY depreciation on USD/ARS.
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Informality rate in:
  • Argentina: 47.8%
  • Peru: 68.3%
  • Colombia: 62.4%
  • Mexico: 57.4%
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Only 19% of LATAM adults have access to credit cards.
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Less than 0.15% Argentinians and 2% Mexicans invest in brokerage accounts.
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8% average cost of sending a 200 USD Remmitance inside the continent.

Banking Sector in LATAM
👨‍👩‍👧‍👦
Concentrated Market

In Mexico, there are 51 banks. Colombia only has 25. Compared to the thousands of banks in the U.S., there is a significant delta in the number of choices consumers have.

This is exacerbated by extreme bank concentration: in Brazil 80 percent of deposits are concentrated in top 5 banks and in Colombia top 3 banks earned 70% of sector profit.

                                                                                   a16z Report
a16z Report
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Highly Profitable industry

Industry concentration helps Latin America banks to be the most profitable banks around the world. In Mexico and Brazil, the return on equity, —a metric useful to understand bank profitability—hovers around 18 percent, almost five times that of French banks and twice that of American banks.

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Underserved Sector

Banks have concentrated their offering in: government, corporations and HN individuals leaving a big percentage of the population with low access to financial services (unbanked) or low quality services (underbanked).

In Mexico, for example, over 50 percent of people are unbanked, over 30 percent have no access to any financial product, and just 31 percent have access to credit product.

                                                                               a16z Report.
a16z Report.

NeoBanks getting the market

The low penetration of banks in middle and low income customers jointly with the 80% mobile phone access in the continent and friendly regulation created a perfect context for Neobanks and fintechs to scale their services. In the past five years NeoBanks onboarded 80 million customers which despite being impressive, is just 11% of continent userbase.

Digital Banking in Latin America, BPC.
Digital Banking in Latin America, BPC.

Cryptocurrency Case in LATAM

The last two years, global adoption of cryptocurrencies has grown by over 2300% with Latin America playing an import role on retail usage. Despite of being among the smaller economies globally, Latin American ranks three countries in the top 20 Global Adoption index: Argentina, Brazil and Venezuela. Biggest uses cases are related lack of financial infrastructure alternatives on the region:

“in emerging markets, many turn to cryptocurrency to preserve their savings in the face of currency devaluation, send and receive remittances, and carry out business transactions; in North America, Western Europe, and Eastern Asia, by contrast, adoption over the last year has been driven largely by institutional investment”. Chainanylsis Geography of Cryptocurrency Report.
  • Inflation hedge: users buy Stablecoins (such as $USDC) to protect their savings from inflation.
  • Remmitances: purchase of Stablecoins using local currency, transmitting them throught a blockchain transaction and sell for local currency at destiny.
Inflation & Savings Accounts

Since brokerage accounts have close to null usage in LATAM, latinos invest their savings in Bank Savings account or outright cash. Thus, the relevant metrics to analyze the Savings Returns are real interest rates and inflation.

The average real interest rate is -5%. No banks in the continent have been able to outperform inflation.

The impossibility of hedging their savings with traditional institutions and the attractive yield opportunities in USD have encouraged latinos to look for options in Cryptocurrency.

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Users can get 8% in USDC while getting a -12.5% real rate on Argentinian biggest bank.

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As there is no central registry or government entity that captures cryptocurrency adoption data, is difficult to estimate the total number of users per country. Studies from Chainalysis & Americas Market Intelligence estimated between 12% to 15% of LATAMs population.

Remittances
  • Other possible measure of LATAMs Crypto Market Size is the total amount of value transferred in & out LATAM as a proxy of Remittances:

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DeFi Funding
  • Many of the top funds were formed in the depths of the 2018 bear market. It will be interesting to see if any new ones forged in this bear market will emerge as power players in the next cycle.
    • Top VCs in crypto & web3 are more than just capital allocators boasting high multiple returns. They are pushing the industry forward with deep technical acumen, noval design frameworks that endure cycles and define sectors, and in some cases an army of diverse SMEs ready to supercharge your products and brands in addition to the capital.
    • Community engagement and reputation play a bigger role in securing spots on competitive cap tables compared to the traditional VC landscape
    • Down rounds are only getting started and will continue into 2023.
    • 🔎 Top VC’s in DeFi

      Top 50 Web3 VC Rankings | 2022

      🏅 Rank📍 Country🧠 Fund🪜 Tier🔐 Crypto-native💰 Total Investments🤝 '22 Deals🦄 Unicorns
      1
      🇺🇸
      Paradigm
      Chad
      Yes
      85
      25
      15
      2
      🇺🇸
      a16z Crypto
      Chad
      No
      26
      14
      14
      3
      🇺🇸
      Pantera Capital
      Chad
      Yes
      201
      43
      10
      5
      🇺🇸
      Coinbase Ventures
      Chad
      Yes
      278
      87
      30
      4
      🇺🇸
      Polychain Capital
      Chad
      Yes
      161
      27
      9
      6
      🇺🇸
      Dragonfly Capital
      1
      Yes
      98
      31
      8
      7
      🇺🇸 
      Sequoia
      1
      No
      1,725*
      104*
      5*
      8
      🇺🇸
      Variant Fund
      1
      Yes
      30
      13
      5
      9
      🇺🇸
      Electric Capital
      1
      Yes
      67
      15
      6
      10
      🇺🇸
      Multicoin Capital
      1
      Yes
      101
      32
      7
      11
      🇺🇸
      ParaFi Capital
      1
      Yes
      85
      23
      9
      12
      🇺🇸
      Digital Currency Group
      1
      Yes
      286
      32
      11
      13
      🇺🇸
      Blockchain Capital
      1
      Yes
      136
      16
      7
      14
      🇺🇸
      Union Square Ventures
      1
      No
      398*
      32*
      2*
      15
      🇸🇬
      Spartan Group
      1
      Yes
      92
      39
      5
      16
      🇭🇰
      Alameda Research
      1
      Yes
      178
      54
      8
      17
      🇰🇾
      Binance Labs
      1
      Yes
      73
      24
      8
      18
      🇭🇰
      Animoca Brands
      1
      Yes
      236
      121
      9
      19
      🇺🇸
      CoinFund
      1
      Yes
      103
      20
      6
      20
      🇺🇸
      Ribbit Capital
      1
      No
      203*
      20*
      6*
      21
      🇺🇸
      Framework Ventures
      1.5
      Yes
      68
      23
      0
      22
      🇧🇸
      FTX Ventures
      1.5
      Yes
      34
      38
      5
      23
      🇬🇧
      Fabric Ventures
      1.5
      Yes
      56
      15
      5
      24
      🇺🇸
      Jump Crypto
      1.5
      No
      43
      41
      2
      25
      🇺🇸
      1Confirmation
      1.5
      Yes
      34
      6
      4
      26
      🇺🇸
      CMT Digital
      1.5
      Yes
      91
      22
      6
      27
      🇺🇸
      Lightspeed Ventures
      1.5
      No
      1,182*
      105*
      2*
      28
      🇺🇸
      Placeholder VC
      1.5
      Yes
      38
      6
      1
      29
      🇨🇳
      Fenbushi Capital
      1.5
      Yes
      137
      21
      7
      30
      🇧🇸
      Sino Global
      1.5
      Yes
      36
      16
      4
      31
      🇺🇸
      Mechanism Capital
      1.5
      Yes
      67
      25
      1
      32
      🇺🇸
      Seven Seven Six
      1.5
      No
      65*
      24*
      2*
      33
      🇺🇸
      TCG (Chernin)
      1.5
      No
      95*
      12*
      2
      34
      🇺🇸
      AllianceDAO
      1.5
      Yes
      59
      28
      1
      35
      🇺🇸
      Castle Island Ventures
      1.5
      Yes
      64
      18
      1
      36
      🇺🇸
      Blocktower Capital
      1.5
      Yes
      29
      6
      4
      37
      🇺🇸
      Slow Ventures
      2
      No
      521*
      27*
      2*
      38
      🇭🇰
      GSR
      2
      Yes
      86
      52
      2
      39
      🇺🇸
      Shima Capital
      2
      Yes
      151
      82
      1
      40
      🇺🇸
      Delphi Digital
      2
      Yes
      49
      25
      1
      41
      🇺🇸
      Arrington Capital
      2
      Yes
      82
      11
      2
      42
      🇺🇸
      Solana Ventures
      2
      Yes
      57
      40
      2
      43
      🇺🇸
      Collab+Currency
      2
      Yes
      47
      23
      2
      44
      🇺🇸
      Dapper Labs
      2
      Yes
      59
      31
      1
      45
      🇺🇸
      6th Man Ventures
      2
      Yes
      33
      26
      1
      46
      🇺🇸
      gumi Cryptos
      2
      Yes
      47
      7
      3
      47
      🇺🇸
      Robot Ventures
      2
      Yes
      40
      8
      1
      48
      🇺🇸
      CMS Holdings
      2
      Yes
      87
      16
      0
      49
      🇸🇰
      Zee Prime Capital
      2
      Yes
      35
      18
      0
      50
      🇺🇸
      Volt Capital
      2
      Yes
      24
      9
      2

      Overall Funding as of Jan.2022 : Year-wise trend of all investment activity: 2018 - 2022 (as of January 31)

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      VC’s are prioritizing startups that offer web 3.0 infrastructure development, payment services, NFT marketplaces, cross-chain interoperability of digital tokens, decentralized data storage, and live video streaming services. VC deals in web 3.0 witnessed a significant surge in 2021 and continued the trend in early 2022. Nearly $2 billion venture financing has been completed by January with a special focus on startups offering payment services, NFT marketplaces, and cross-chain interoperability.

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      LATAM VC investment in Crypto

      • VC investment in blockchain/crypto reached USD653m in 2021, up from USD68m in 2020, in parallel with rising consumer interest for digital assets and Decentralized Finance (DeFi).
      • Capital was concentrated in consumer-facing asset exchanges and retail trading platforms, with notable rounds for Mercado Bitcoin (USD290m across three rounds), Bitso (USD250m), Ripio (USD50m) and Lemon Cash (USD17.3m).
      • Beyond consumer, investors began backing B2B platforms in Q1 2022, including Liqi (USD5.5m), Gavea Marketplace (USD5m) and Agrotoken (USD5m).

      Fundraising Gaps

      • The digital world post-covid forced us to learn to communicate and work remotely. This has impacted positively both the world of the entrepreneur and that of Venture Capital. In this unbundling lives phenomenal, generational opportunity.
      • Most VCs are now open to opportunities throughout the world. Often the VC team themselves, are located throughout the world, startup founders can be virtually anywhere too.
      • Consideration for great startups is no longer limited by geographic presence but by the quality of the startup, the regional knowledge & experience of the VC to understand the market & domain.
      • VCs often feel that their ability to help the teams they invested can be directly related to their network of entrepreneurs, partners, lawyers, financial professionals, universities, and labs. I can be that bridge of market knowledge and domain expertise to help identify generational opportunities.
      • Having both domain and regional knowledge can bring a fresh perspectives to innovative business models through the cross pollination of ideas, backgrounds and expertise.
      • Despite the VC industry’s proliferation in LatAm over the past years, the deployment of capital is far from uniform throughout the region. This creates opportunities for investors to fill gaps in potentially overlooked markets. There is an increased role VCs with regional knowledge can play in attracting foreign capital and getting foreign investors familiar with the nuances and opportunities in their home markets.
      • LP’s in the region normally look to invest in Funds they have established a trust-based relationship with. I can reach a large amount of investors within my network who have invested in previous projects where I have collaborated in.

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Future
Startups I am optimistic on:

Startups

NameDescription of Problem/SolutionVerticalAmount RaisedWhy is this startup interesting?
Let’s Bit
Let’sBit is the Bank Account in LATAM that uses Crypto to offer more credit and better savings rates than traditional institutions. On Let’sBit users can: • Deposit their wages in Local Currency, exchange them to USD and Scape Inflation. • Get a 6% APY USD Savings Account. • Pay anywhere with Let’sBit Card. • Get a loan to finance their payments in installments.
Crypto
$2.5M Pre-seed
Let’sBit integrates Crypto to Traditional Financial System to offer a simple to use Bank that offers higher rates for savings, lower interest on credit and faster international payments that traditional banks or fintechs. -Let’sBit looks, feels, and is licensed as a trade fintech and in the back, they use StableCoins and protocols for immediate payments, 0-cost credit origination, and high-yield accounts. They have tripled user base during 2022 (+15% growth MoM). In September users grew by 18%, Processed over 60MM USD over the last 9 months. In September volume grew by 30%., 70K accounts, +10,700 paying users. Live in Argentina, launching in Peru & Colombia, Closing to 1MM Yearly Revenue Run Rate (70K monthly). Closed a pre-seed earlier this year led by Angel Ventures in Mexico.
Belo
Belo is a digital wallet to move in pesos and cryptocurrencies and that your money is worth more every day . A wallet that seeks to build a bridge between pesos and cryptocurrencies in a simple and intuitive way makes your cryptos a daily experience , With belo getting into crypto is no longer a headache. Now you can start in the friendliest and simplest way. Transfer your pesos, buy cryptocurrencies, exchange them immediately and obtain returns.
Crypto
$3M seed
Belo is a crypto-fiat digital wallet, where users can exchange and save crypto and FIAT Money seamlessly. Additionally, Belo allows users to pay and collect payments using crypto & FIAT, thanks to its QR and Belocard payments feature. Mastercard announced that Belo will take part in the new edition of the Start Path Crypto, the first Start Path program to focus on the unique needs of crypto/blockchain companies.Really talented team, the company wants to give access to 2B people to cryptocurrencies, allowing them better financial products for payments, with a really simple UX.
Bits Crypto
Bits rounds up your every day purchases to the next dollar and invests that spare change into crypto .
Crypto
$1.2M seed
Bits allows users to invest their spare change in cryptocurrencies through automatic dollar roundups. Each user’s credit card transaction is rounded up to the next dollar and that difference is invested in cryptocurrency. Similar to investment platform Acorns, which automatically invests in a portfolio of stocks, Bits caters to users who want to dollar-cost average small amounts to build their portfolio of crypto investments over time.
Securo Finance
Making DeFi accesible with all-in-one API
Crypto
$2M seed
Securo Finance simplifies crypto investing with DeFi indices, with all-in-1 dashboard and API integration - “Stripe for DeFi”. Securo is an all-in-1 DeFi infrastructure protocol for investors and funds to invest & manage their DeFi investment portfolios. The smart contract strategies deploy the $ to the respective smart contract pool on-chain, yield farm and auto-compounds for investors, automatically. Securo integrates APIs to connect to DeFi protocols; Fiat-to-crypto, KYC and custodians etc. Backed by Techstars Web3 and Alphabit, Securo's team has a proven track record in building and running tech products and business; ex-Google, Standard Chartered Bank and more.
Coco Pago
Web3 money transfers to family and friends in Latin America. Fast, easy and fun!
web3
$2M Seed
Backed by Y Combinator. Launched Coco Pago on March 1st, transactions growing 120% week-over-week. Founders understand crypto, having launched the first Bitcoin exchange platform in Venezuela in 2014. CocoPago will leverage CocoMercado's user base, an existing product with +100k users, +$25M in GMV. Digital cross‑border remittances expected to grow from $295 billion in 2021 to $428 billion in 2025

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FINAL THOUGHTS
  • Thesis Deck 🔎
  • As we address some of the risks such as security and scalability to reach sufficient maturity, the core features of DeFi will proclaim a significant edge over existing legacy finance and fintech businesses by providing large-scale benefits.
  • Risk-adjusted benefits will make DeFi the prevailing solution for financial services in the future or at the very least co-exist with traditional finance providing a template for decentralization of other domains.
  • DeFi is evolving to be a credible alternative to traditional finance, thanks to the growing popularity of crypto investments, challenges with traditional finance, and asset tokenization trends. With supportive regulatory policies, infrastructure development, and simplified user experiences, DeFi has the potential to rewire traditional finance.
  • Interest in crypto and DeFi has exploded over the last year in Latin America. There has been a consistent and massive rise in cryptocurrency, including its fundamental blockchain technology. This comes as no surprise. With a fall in government regulated currencies, Latin Americans have turned to virtual money for a safer and more profitable option.
  • The population of the financially underserved is not completely known in Latin America. According to statistics, it is estimated that the number is about 70% of the population, that is, over 400 million people. This staggering number will allow DeFi to close the gap and bring the obviously needed financial inclusion to the region.
  • Crypto is a unique opportunity to democratize banking in LATAM. Until now, banks were focusing their financial services to the top 1%, leaving 99% of latinos with negative-yield savings, ultra-expensive regional payments and almost 0 access to credit.
  • The future appears promising for continued growth of Latin America cryptocurrency markets, propelled by expanding awareness of cryptocurrency, the desire to break from traditional banks, the popularity of digital wallets, the continuing advancement of internet access and persistent economic instability.
  • Given the complex dynamic at play in Latin America, the proliferation of the digital dollars across the region promises to alleviate economic pain points and increase the spending and saving power of millions, thus helping drive innovation and market development. Digital dollars will prove an important mechanism for unlocking Latin American economies.
  • Cryptocurrency and DeFi are well-positioned to effect positive change on Latin American economies and people, helping isolated, unbanked consumers merge onto the economic freeway, and thus aid the growth of struggling economies.
  • Everyday people are finally discovering a remedy for the mistrust of financial institutions. Whether it’s through investment opportunities, avoiding the hefty fees of traditional remittances, or enabling faster payments transactions, cryptocurrency and blockchain technologies ultimately put more power and assets into the hands of everyday consumers in Latin America, an essential component of growth.

Sources
Joining Pantera Capital: Dropping out of Harvard Business School in a Crypto Bear Market
How a VC firm that turned $700K into $4B is betting on the future of crypto gaming

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