Decentralised Finance - DeFi - has grabbed the headlines. web3 has ushered in a whole host of projects seeking to revolutionise the financial services industry. While there has been much effort, endeavour and hype there has (at least to date) been little of substance to back up this promise.
This is perhaps to be expected. It took a couple of decades for the first incarnation of the Internet to find major traction in capital markets specifically and financial services more broadly.
This video post looks at several candidate web3 projects. It analyses them based on tehor practicality and desirability. It concludes that initial traction is less likely to occur when replacing existing services in established markets with like-for-like DeFi projects.
Instead greater gains are available sooner by taking existing products and services that operate in high-touch, high-value, human-in-the-loop markets; and offering analogous, low-touch, automated web3 services in mass markets.
This video uses examples of Central Bank Digital Currencies, 'Casual' Derivatives, Mortgages and securitized cashflows to help illustrate this point.
Blockchain is fundamentally a technology that allows strangers to agree about stuff on the Internet. By replacing expensive trust-based networks, with inexpensive networks based on cryptographic proof a whole host of potential new and larger markets beckon for financial services.
