Throughout history, financial intermediaries have connected buyers to sellers, enabling the exchange and transfer of products and money that make up markets. The middlemen, brokers or banks, take their cut along the way — a just reward for facilitating financial transactions.

These centralised financial institutions make colossal deals with each other that exploit entire markets, receiving returns unattainable to the average person. In this world, it’s not who you know but how big your bank balance is.

On a smaller scale, banks take custody of people’s money, investing the funds to earn a return as well as loan the funds out to other customers at high rates. They add bank fees to these incomes for their services, facilitating loans and savings interest to the masses. This made sense in the past. Without banks, finding someone to borrow money from for a quick and liquid investment would be impossible for the average person.

This financial system has remained relatively unchanged for hundreds of years, with the famous Medici Bank established in 1397. Even the advances in software and the internet have done little to change the financial services industry. While consumer expectations have changed, financial institutions have responded with aesthetic touch-ups, like improved user interfaces and expanded online offerings, but traditional business models have persisted.

This is in stark contrast to the complete disruption experienced by many other industries, from retail commerce and hospitality, to media. Film cameras all but disappeared in the wake of digital cameras, and when was the last time you went to Blockbuster Video? In the age of rapid innovation, we will see many outdated models giving way to new and better ways of operating. Traditional Finance is next.

What is DeFi?

Decentralised Finance (DeFi) is about reconstructing the entire financial system on decentralised blockchains. It transforms centralised manual, inefficient financial services into automated blockchain-based programs called smart contracts. For the first time in history, markets don’t need a centralised financial intermediary (in a world known as CeFi or Centralised Finance) to connect buyers and sellers as smart contracts connect them directly. This has seismic implications.

What can you do with DeFi?

Through DeFi programs, everyone with an internet connection can borrow and save, send and receive, buy and sell and even insure their money. This takes place between users all over the world via peer-to-peer blockchain-based networks. There’s no more need for the bank, stock exchange or insurance broker as we know them today.

DeFi, users can earn the highest return on their wealth without the need to give the middleman their cut. It gives users the freedom and visibility to manage their finances in ways that banks simply can’t compete with.

The other side of the coin is over collateralised loaning services. DeFi users can instantly borrow up to 85% of the value of their deposited crypto without credit history and 0% interest. When you consider the annual growth of premium cryptocurrencies like Bitcoin or ETH and overlay DeFi services, you quickly see the scale of disruption ahead.

While DeFi networks already manage over $200Bn, we are still early in the technology adoption cycle. Mass adoption will follow institutional money, and right now, institutions are waiting for regulation and institutional-grade development, both of which are well underway.

You only need to look at two of the worlds leading accounting firms: Ernst and Young and Deloitte. Both are breaking new ground with Polygon and Avalanche blockchains, respectively, developing audited and secure portals for their clients to use DeFi.

It’s not just the open ledgers or the blockchain that receive audits. The codebase behind DeFi networks and Smart Contracts is audited to the highest specification possible in a growing sector of certification and security. The collective brainpower in crypto is unlike anything the world has seen, and it’s just getting started.

A recent survey by Valk found that a third of investors from 8 major finance sectors invested in crypto for the first time in December 2021. Of these, 68% plan to invest in DeFi in 2022. With global markets experiencing volatility and traditional finance institutions offering less yield by the month, institutional adoption of DeFi is just a matter of time.

Being an early investor in disruption of this scale pays outsized dividends. To facilitate this early access, Altify (a Cape Town-based investment platform backed by JSE listed Sabvest) has built an easy to use and customer-friendly portal to all things crypto. On Friday, 25 March, Altify launched a new themed DeFi Crypto Bundle, offering users exposure to the cryptocurrencies building the future of finance.

The DeFi Crypto Bundle, which saw 137% growth in 2021, offers a selection of the world’s leading DeFi tokens in one convenient investment. Through the DeFi Bundle, you receive exposure to the world’s largest decentralised exchanges, lending platforms and payment platform’s cryptocurrencies. It’s a lot like buying property off-plan in a great neighbourhood — you know what the end product will look like, and you’re taking a calculated risk on its future value.

The DeFi Crypto Bundle automatically rebalances (meaning it makes slight changes to the weighting and assets in the Bundle) on the 1st of every month. It takes advantage of opportunities available from the most reputable DeFi cryptocurrencies through buying or selling each asset. This dynamic and fully automated approach makes investing effortless, maximising your returns and saving you time.