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DeFi—a four-lettered abbreviated moniker given to a burgeoning industry called decentralized finance—has been touted as an industry that will supposedly right a great imbalance of sorts. According to a World Bank report published in 2017, around two billion adults around the world do not have a bank account or access to financial institutions. Despite efforts, this imbalance in access to global finances continues due to either natural, geopolitical or man-made causes which, of late, have only added to this problem.
The bane of the problem, in many ways, seems to point to oligarchical financial systems that have restricted some and placed high entry barriers and institutionalized greater control over people and their money. DeFI, financial applications that run on blockchain networks, aims to remove this high-ended gatekeeping and open up the financial sector not only to those who are currently unbanked, but also to those who are currently tied to the custodial and centralized financial systems.
It is this crowd of people that have curtailed access to finances, who will benefit greatly from the DeFi movement and drive worldwide adoption. There are some hurdles, as explained below, and EasyFi Network has envisioned to solve most of them via a unique permission-less money market protocol for digital assets that has been completely built upon permission-less or open blockchain networks.
Traditional lending: issues upfront
A key imperative in the growth of economies is the need for inclusive growth. This is a challenge right now owing to limited access to financial services due to entry barriers for certain segments, lack of borrowing opportunities, non-inclusive risk parameters, too many documentation requirements, lack of innovation, high-fees transactions and top-down management structures.
According to a World Bank report, only 69 per cent adults worldwide have a bank account and in some way an access to some financial services. This means that around two billion adults remain unbanked globally without access to any sort of capital, financial institution or any traditional money provider.
Traditional money markets are seen as low-risk, short-term investments in debt. Financial institutions are limited by their profitability and solvency requirements, and hence have high-entry barriers towards external funding. As a result, profitable ideas do not get financed as they do not meet the requirements set by the banks or FIs. The FIs also have an internal scoring system that is not transparent and leads to a trust deficit between the loan provider and the taker. Furthermore, the processes set by the FIs are expensive, opaque and inefficient.
Hence, easily available credit and total financial inclusion does not seem to be the key performance area of any FIIs.
EasyFi Network: The money market protocol
EasyFi Network is a permission-less, transparent and immutable money market protocol for digital assets completely built upon public blockchain networks and is part and parcel of the decentralized finance industry.
The DeFi lending protocol is striving to address the constraints that exclude people from participating in the financial sector. EasyFi aims for easy accessibility of capital for all individuals and businesses, irrespective of their net worth and size, and that too at affordable costs.
As stated above, a large chunk of users in the traditional finance (TradFi) lending markets lose out on availing loans due to the high entry barrier and non-inclusive terms and conditions among the financial institutions. EasyFi will bring about a change in this aspect by enabling smaller investors to take loans of their choice without having to go through the rigmarole of the processes laid out in TradFi lending. They simply get to use a blockchain-based finance application with ease and in an automated manner to avail loans.
On EasyFi’s decentralized application, users can lend and borrow any digital asset in lieu of and for a market-driven rate of interest without the interference of any third party and also retain custody of their assets, unlike a bank in the traditional institution, where the custody of deposited funds is with the bank .
EasyFi works like a peer-to-peer lending infrastructure, where users can get access to global lending markets, beyond geographical constraints, removing the need for rent-seeking intermediaries. Eventually the protocol empowers users to choose financial products of their choice from a repertoire of multiple lending products. The overall plan is to focus on the borrower rather than simply build a platform for users to lend and borrow their digital assets.
Users on EasyFi can avail payday loans, microloans, credit default swaps and that too in a few clicks while retaining self-custody of their digital assets.
EasyFi market update
Since its inception in October 2020, EasyFi Network has disbursed loans to the tune of $35 million to more than 6,500-plus unique users. The project has created a huge global user base and has conducted businesses of more than $50 million in the last six months. The team did not conduct a large fund-raising for itself and started off with an initial angel round of $300,000 with angels from the TradFi and DeFi space at a $3 million fully diluted valuation. The current valuation of EasyFi stands at $300 million while its native token EASY is being traded in major global digital asset exchanges.
As a company, Easy is working towards building an innovative infrastructure with products and services conducive to the growth of this industry and promoting financial inclusion for one and all. With major expansions planned vertically and horizontally, with multiple new products and services such as consumer loans, business loans and salary loans, EasyFi will soon be adding newer revenue streams, and plans to be net positive by Q2 of 2022.