DeFi for the real world

Massive growth potential

Rapid Growth

This chart from May is out of date — the current asset measure is $63B , but one fact remains true: DeFi assets and revenue have grown more than 60X in one year. Growth is what creates opportunities for startups.

Almost all of this growth is inside services for crypto trading and leveraging. That’s just a small bit of the financial services industry.

Future Growth

Amazingly, this growth rate can continue. The available asset base in financial services is thousands of times larger.

Our investors sometimes pitch back to us that “every financial service can be rebuilt with DeFi.” Everywhere we look we see opportunities to bring DeFi efficiency, accessibility, and innovation.

In the categories that we targeted and illustrated here — law (escrow + arbitration), venture capital, banking, and marketable securities, assets add up over $300T. There are many other categories that we haven’t looked at yet.

The benefits

DeFi or “decentralized finance” replaces banks, exchanges, funds, and insurance companies with software. This creates:

  • Efficiency. The DeFi version uses far less labor, mainframes, and real estate.

  • Access. Any Internet citizen can be a producer or a consumer

  • Rapid innovation

Figuring it out

Someone needs to do the creative work to bring DeFi magic to a real world financial service. What’s the “aha” value add? What’s the architecture? How do we deal with regulation? How do we reduce risk, and simplify? Can we test the idea with customer interviews or test marketing? Can we get validation from contributors and investors?

We are figuring it out.

Quantifying the opportunity

We can’t estimate the total addressable market for DeFi-style financial services. It depends on the interaction of TradFi and DeFi. We will need to find the answer to questions like this: Will DeFi provide banking services to retail customers? Or, is it more useful as a wholesale back end?

We can be more sure about growth. DeFi has the potential to grow hundreds of times bigger.