Decentralization is new but emerging way to think about finance

Jason Wu

Decentralized financing (DeFi) is now part of the cryptocurrency ecosystem. BankBeat asked Jason Wu, the CEO of Minneapolis-based DeFiner, a crypto bank fintech that facilitates savings and loans using cryptocurrency, if its service is a tool for traditional banks — or their new competition.


It seems DeFiner is the very opposite of a community bank. How do you define DeFiner?

Jason Wu: DeFiner is a decentralized financial network for crypto savings and loans. It uses blockchain to provide lending and borrowing services through an automated network.


Who are your customers and what are they looking for that they can’t get from traditional banks?

J.W.: Customer potential is vast. Institutionally, there are blockchain-related small- to-midsize businesses, crypto mining, startups, digital wallet providers, crypto exchanges and stablecoin issuers. There are blockchain support services such as capital firms, financial institutions, hedge funds, trading desks, media companies, PR companies, and related services. 

Individually, there are tech-savvy consumers such as early adopters and those in the general blockchain community, high net worth individuals, entrepreneurs and experienced professionals. 

Currently, traditional financial providers don’t offer such automated lending that is enabled by distributed AI — i.e., smart contracts on a blockchain. On top of being more efficient and cost-effective, this tech isn’t as restricted by business hours or geography — sometimes not restricted in these areas at all, in fact.  


What do you say to the skeptics about the technology?

J.W.: Some of the most reputable leaders in finance are skeptics of blockchain finance and DeFi. I understand their position, because of how different and revolutionary this tech stands to become. And because it’s so new, processes are volatile and there are many failures and mistakes publicized, just as there were when man tried to build the [first] airplane. But within a couple of short decades of the successful first flight, planes were ordinary. This will be the case with blockchain and DeFi.

Just look at the past 10 years for Bitcoin — from $0 to $50,000 each. And look at DeFi over just the past year — total value from $1 billion to $35 billion, according to DeFi Pulse. 

Some of this growth is hype and speculation, but underlying it all is real, applicable value and benefit. In a more decentralized future in general, this is the future of finance, and we look forward to being a part of it. 


Does a service like yours have a role alongside traditional money management, or do you consider banks your competition? 

J.W.: Within the greater financial landscape, traditional money management dominates the lending and borrowing business. The entire financial system’s infrastructure (government-backed currencies, credit scores, insurance) is built for this world. 

As the decentralized world develops, however, more people will want the benefits this world has to offer. Right now, it’s very small but has grown rapidly over the past few years. Based on our own analysis and that of others, total aggregate digital asset volumes of all DeFi market participants totaled $300 billion in 2020. Annualized loan volumes have now grown to $2 billion with nearly 600,000 transactions, according to LoanScan. 

We need to work with traditional finance. Bitcoin isn’t the currency some believed it would become. Fiat currencies will continue to dominate as the means of exchange, with stablecoins (crypto-tokens pegged to U.S. dollars and other major currencies) acting as bridges between the two financial worlds. 

For their part, banks will reach over to this side to build relationships with cryptocurrency exchanges (whereas now some are prohibiting their customers from transferring funds back and forth). This overall relationship will also be affected by the implementation of government currencies becoming tokenized via distributed ledger tech (blockchain).


What do you think a banker might want to know about this technology that isn’t quite getting across? 

J.W.: The decentralized finance industry is still young. There are a lot of technological hurdles and other issues to be resolved. We are years away from mainstream adoption, but in time, the benefits of conducting finance (loans, payroll, gambling, insurance) with this technology will become standard. Right now, banking is understood within a centralized conceptual framework. Bankers, then, have the added challenge of needing to rethink money and finance in this new way.

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