Ethereum is Becoming a major Tool for Finance with DeFi


While it has been argued that Bitcoin and blockchain have struggled to find a niche and a ‘killer application’ Ethereum, as a programmable blockchain, could be settling into its new role as a chain for finance. Through the growth of DeFi (Decentralized Finance), Ethereum has become a new arena for different milestones from this burgeoning sector. 

The latest milestone reached by DeFi on Ethereum has seen $1 billion total value locked on the application. This is significant as a milestone as well as a pointer towards Ethereum’s designation. The DeFi movement is spread across a number of chains, but Ethereum holds the largest share by some way. 

The reason for this was explained recently by Camila Russo, Founder of a DeFi-focused newsletter, ‘The Defiant’, in a recent podcast. She said: 

 “I think the reason why finance has become the main use case for Ethereum at this point is because it’s one major aspect in the non-blockchain, traditional economy that feels just so ancient and so ripe for disruption. We’re still depending on many intermediaries, we still have to pay such high fees, we’re still limited to where we are born, to what financial services we get. There are many barriers to how value and money can move.”

Internet of value

Part of the niche that blockchains can fill, that has not been accounted for before, is a so-called internet of value. We currently have an internet of content, but the need for digitized value has come to the fore and is more prevalent than ever.

While the inception of Bitcoin was the first step to this, Russo believes that Ethereum: “can and is taking it further with programmable money”, by allowing “use cases for value being used in a decentralized way”. she further added,

“This is just such a huge thing that needed to happen, to have a way to really be in control of your own value. When Ethereum provides a way to do this, it is when you’re seeing a real use case and fit that people are really excited about.”

The next step

As Russo mentions, there is an evolution in the cryptocurrency space as it continues to try and find its place. There have been failed attempts to shoe-horn it in, such as in the ICO space where these projects were funded by their own token’s value, but DeFi has real application.

“Ethereum and tokens became such a bad name that people are very careful this time around to make sure that things are done the right way, that incentives are aligned, that developers and teams building these projects actually have the right incentives to follow through and deliver,” Russo added.

“The amount of measured progress, measured with actual use cases, measured with actual value being created that we’re seeing in DeFi, signals that the lessons from the ICO era are really taken to heart in the Ethereum community. I think that’s great to see.”

Darryn Pollock
Darryn has been interested in the blockchain and cryptocurrency space since he heard about Bitcoin in 2015. He then decided to use his journalism degree to report on this fascinating fintech space in 2016, and has not looked back since.

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