Why we need DeFi:

In our digital era, isn't it weird that not a single big bank began as an internet startup?

Banking's been the same oligopoly for decades.

A thesis:
Big banks are protected by their relationship w/ govt.

DeFi is the most credible threat to this oligopoly

1/

What does the regulatory moat for a big bank look like?

1. Close relationship with the Fed
2. Too big to fail - access to future bailouts
2. Bank charter - govt. recognition of staus
3. FDIC - treasury protects users

This privileged status is so hard for startups to attain.

2/

Even worse, to build a startup bank, you need to connect w/ other banks.

Otherwise, your users won't be able to send money to users of other banks.

If the dominant banks see a startup as a threat or competitor, they don't have to work with them.

This hurts competition.

3/

How does DeFi fix this?

DeFi is a fully-contained financial system w no privileged actors, no entrenched oligopoly, & no govt moat

It's now technically possible for a startup to create & provide financial products w/o integrating w/ the banking system (i.e. its competition)

4/

The financial system is now made up of 0s and 1s, most money is digital. The internet has disrupted industries that are far less digitized.

DeFi gives startups a footing to compete against banks.

As a result, it's tech's most credible response to the bank oligopoly.

5/5