The world of decentralized finance, or DeFi, has vastly expanded over the past two to three years. One year ago, there was just $1.25 billion of ‘total value locked’ (TVL) in DeFi protocols. Today that figure has expanded to more than $62.5 billion.<\/p>\n
Most of this growth has been driven by retail investors. While these investors control a significant amount of capital, many analysts argue that DeFi\u2019s full potential will not be reached until the rails are built to support the integration of institutional capital.<\/p>\n
Bank Account Alternative. Business Account IBAN.<\/strong><\/p>\n Recently, Finance Magnates spoke with Brad Yasar and Jason Blick, who are respectively the Chief Executives of EQIFI and EQIBank, to speak about building the infrastructure needed to create institutional channels in and out of DeFi. We also spoke about regulatory structures and the transition between the centralized past of the financial world into a more decentralized future.<\/p>\n EQIFI is a decentralized protocol for pooled lending, borrowing and investing Ethereum-based cryptocurrencies, stablecoins and select fiat currencies. EQIBank is a global, digital bank and financial services organisation that works with corporations and High-Net-Worth Individuals.<\/p>\n <\/p>\n This is an excerpt. To hear Finance Magnates\u2019 full interview with Jason Blick and Brad Yasar, visit us on Soundcloud or Youtube.<\/em><\/p>\n What are the specific problems that EQIFI and EQIBank solve?<\/p>\n Jason Blick explained that together, EQIFI and EQIBank are working to solve several issues concurrently, each related to core banking.<\/p>\n The banking system as we know and use is plagued with a set of problems that stem from a lack of innovation: \u201cold technology; inefficient, monolithic structures, enormous overheads because of cash handling, branches and, in some respects, obsolete pricing.\u201d<\/p>\n In other words, \u201cBanking as a core entity has long needed a technology boost,\u201d Jason said.<\/p>\n \u201cIf you move that into lending and borrowing, it can often become very complicated. Taking loans from centralized entities and institutions can sometimes take weeks, or indeed months, if you\u2019re a corporate customer. Being able to speed that up with a decentralized platform is incredibly exciting.\u201d<\/p>\n After all, the sheer size of the banking industry holds incredible potential for innovators who are up to the challenge: \u201cThe interest rate swap market is worth $500 trillion, and that market hasn\u2019t changed for a great deal of time, and is subject to a series of \u2018legacy problems\u2019 around human error, market risk and counterparty risk, all of these things can be better dealt with in a DeFi environment.\u201d<\/p>\n However, DeFi has its own share of shortcomings, problems that EQIBank and EQIFI are also seeking to address. \u201cDeFi is a new industry, just two to three years old, really,\u201d Jason said.<\/p>\n As such, \u201cThere are a couple of problems with DeFi: it’s very inaccessible for most people, a lot of people who may have been involved in the creation of DeFi platforms are technically savvy, but may not really understand financial services.\u201d In other words, innovators in the tech-heavy DeFi world may be struggling to understand and meet the needs of clients in the financial world in practical, user-friendly ways.<\/p>\n \u201cSo we’re seeking to solve all of those problems,\u201d Jason said, adding that EQIFI and EQIBank may be uniquely positioned to do so: \u201cWe\u2019re a licensed and regulated bank that’s powering all of these platforms and product sets, which gives people a sense of security and accessibility.\u201d<\/p>\n Brad Yasar added that in addition to bringing the wealth of the classical financial world into the DeFi space, EQIBank and EQIFI are aiming to build a bridge between the wealth of the DeFi space and the classical financial world.<\/p>\n \u201cThere are a lot of people who have generated various amounts of wealth in the DeFi space,\u201d Brad said. However, \u201cwe see that that value is unable to translate into their everyday lives, which is a big problem.\u201d<\/p>\n Imagine: \u201cyou create this business in the DeFi space; you create a lot of value for your stakeholders, and everyone’s happy. But when you want to go buy a car or a house, that’s not an option for you, because the wealth you created exists only in the DeFi space.\u201d<\/p>\n \u201cBy addressing both sides of this conversation, we hope to give people who have been very successful in the DeFi space a footprint in digital banking, so that they can access the wealth they created and use it in their everyday lives.\u201d<\/p>\n How exactly are EQIFI and EQIBank working to solve these problems?<\/p>\n One aspect of the two firms\u2019 work has to do with providing better interest rates. \u201cMany people that we bank aren’t altogether happy with the interest rates that are available from institutions and banks across the world,\u201d Jason explained. \u201cWe are lucky as a marketplace to provide more than 2% per year in dollars.\u201d<\/p>\n \u201cIn DeFi, people are lending and borrowing and investing. And they’re getting significant returns on their investments that can often exceed those fixed-term deposits,\u201d Jason went on. \u201cSo, we’ve created two lending products: a fixed-term lending product and a variable rate product, often known as a \u2018money market product,\u2019 so you can get your money out really quickly.\u201d<\/p>\n \u201cAs I mentioned, we are the first institution that’s gone into interest rate swaps. This enables our clients to refinance,\u201d he said.<\/p>\n \u201cFor example: perhaps you’ve got a money market product, but you want it to be a fixed-term fixed rate product. Imagine that you’re borrowing at a rate of 12 or 13 percent today, but you want to convert that into something 6 or 7 percent, or the other way around. These products make it possible.\u201d<\/p>\n In addition to these lending products, EQIFI and EQIBank offer a yield aggregator, \u201cwhich is a nice way of making an investment decision, and really farming that out across a series of platforms to replicate a \u2018fund model\u2019.\u201d<\/p>\n \u201cSo, in combination, we have the greatest number of DeFi products on any [singular] platform,\u201d Jason said, adding that the platform is \u201csynced up with an existing and regulated bank.\u201d In other words, \u201cyou’ve got a real on an off-ramp for all of these products.\u201d<\/p>\n By creating these products, EQIFI and EQIBank hope to attract a new class of client to the DeFi space.<\/p>\n \u201cAt this current moment in DeFi, what we have is an incredibly capable, largely technology-driven client base that consists of individuals more than anything else,\u201d he explained.<\/p>\n \u201cWhat we want to do is encourage funds, family offices, capital markets and public monies to really consider DeFi as a legitimate investment target. This will give us the opportunity to expand DeFi from its $1.3 billion market cap into a more significant capitalization of $10 trillion to $40 trillion, which is really necessary if you’re going to scale.\u201d<\/p>\n \u201cThe only way to do that is by tackling public monies, capital markets, monies, family offices, hedge funds, et cetera…by injecting all of that institutional money, you’ve got better liquidity, you\u2019ve got better rates and you’ve got incredibly competitive products.\u201d<\/p>\n Brad Yasar explained that in order to bring these new sources of capital into the DeFi space, a transparent and regulated entity is crucial.<\/p>\n In DeFi today, \u201cthere are hundreds of protocols, platforms and products launching. And unfortunately, a majority of them are anonymous,\u201d he said.<\/p>\n One of the predominant narratives that attracts new users to crypto is that it takes authority away from centralized institutions and allows individuals to ‘be their own banks’. However, Brad pointed out that transitioning from a centralized financial past into a decentralized financial future is something that needs to be done carefully over time.<\/p>\n \u201cI\u2019m excited about the interim steps that need to happen for us to get to the future we want,\u201d he said. But this does not necessarily involve getting rid of banks altogether, instead \u201cit involves all of the existing institutional banking and financial institutions evolving along with the DeFi space.\u201d<\/p>\n \u201cAll of the DeFi products and protocols must evolve and converge at a point where we benefit from the best of both worlds. We can’t just ignore what has happened for hundreds of years in the financial world. There has to be a period of transition.\u201d<\/p>\n He explained that EQIFI and EQIBank are building the infrastructure to guide this transition. \u201cWe’re trying to drive evolution on both sides of the ecosystem, and bring it together in a way where technology plays a big role in what we do both on the banking side and DeFi side.\u201d<\/p>\n \u201cBy bringing the two together, we believe we can take the next step towards a more technology-driven [and] decentralized future. If [we act carefully], we’re going to build the future we want to have without alienating anyone.\u201d<\/p>\nTraditional Finance Is Long Overdue for an Upgrade<\/h2>\n
Innovation on Both Sides of the Financial Ecosystem<\/h2>\n
\u201cWe Hope to Give People Who Have Been Very Successful in the DeFi Space a Footprint in Digital Banking.\u201d<\/h2>\n
New Kinds of Financial Products Are Made Possible through the Infrastructure of DeFi<\/h2>\n
\u201cSo Want to Encourage Funds, Family Offices, Capital Markets and Public Monies to Really Consider DeFi as a Legitimate Investment Target.\u201d<\/h2>\n
A Thoughtful Transition from the Financial World\u2019s Centralized Past into a Decentralized Future<\/h2>\n