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Ask HN: Is there a market use case for DeFi outside of emerging markets?

3 points by likeabbas ↗ HN
Hi everyone,

I am job hunting now and it seems like half of the companies reaching out to me are involved with DeFi. I have stayed far away from the crypto space because I have yet to see a valid use case for it in my own life, and of the plethora of scams in the space. I’ve read numerous threads here where people debate the usefulness of DeFi and crypto.

From what I can tell, there is one use case that DeFi is actually useful, and that is acting as the financial infrastructure for people in emerging markets who don’t have access to any traditional banks or lenders. This alone isn’t enough to convince me though because as it stands, anyone with access to traditional finance infra should continue to do so as you get far more assurances through auditing, and US federal support like FDIC.

Can someone explain to me a specific situation in which someone in a western country would want to use DeFi outside of speculative investing?

5 comments

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jqpabc123
The big hinderance for all things crypto is the obvious fact that it is not a real functioning currency. Any magic and manipulation done in cryptoland is meaningless and useless until tbe result is converted back into a usable, real world, functional currency.

The gatekeepers to achieving this (aka "liquidity providers") are waiting there to extract their pound of flesh and in doing so often destroy any value proposition of crypto and make traditional banking look just as good if not better.

To finally answer your question, any practical, real world argument for DeFi is severly limited in my experience and is on the verge of being shrunk even further.

https://explore.fednow.org/

likeabbas
I agree with you entirely. You can’t have both a stable currency and a speculative investment. Stablecoins in theory should solve it but it seems that every stablecoin vendor is corrupt and untrustworthy. I do see value for developing countries who have no other option, but anyone in western society is going to prefer more regulated centralized financing because it comes with protections that DeFi can’t offer.
jqpabc123
Protections are nice but I and lots of people might be willing to forgo them for sufficient other advantages such as speed or cost. But these are hard to come by now and about to become even harder.

The FedNow service is in trials now and expected to go live in mid-2023 providing real time settlements 24/7/365 at a projected cost of $0.05 per transaction using real world currency. Show me a crypto solution that can approach this and offer a fuctional currency at the end.

As far as I can see, it's game over for crypto in terms of legal, real world transactions.

likeabbas
Is speed of transaction the main limitation of financial services? I’m thinking of DeFi more along the line of accessing financial products like loans or investment opportunities not available to those in every country
jqpabc123
What can you really do with a loan in cryptoland?

Not much --- gamble/speculate maybe?. To really make use of it, you have to convert it into real world currency. This often comes with a 1-2% transaction fee. You lose a lot of potential borrowers at this point.

The fact that crypto is not a functioning currency detracts from all things crypto.