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Let's do a quick exercise, look at your last three purchases. I bought one digital book, energy gels (marathon training in high gear!), one sheet set. Sounds pretty disconnected, but all of these three have one thing in common: I bought them using my phone, at home. I didn't use cash, I didn't even provide my credit card details, I paid using my Apple Pay: double click and face recognition - done.

Finance is undergoing a profound transformation. Digital technologies are reshaping payments, lending, insurance and wealth management, a process that COVID-19 has accelerated, enabling business to happen without needing physical interactions between consumers and providers.

Mobile wallets are a good starting point to think about Distributed Ledger Technologies (DLT) and Decentralized Finance (DeFi). The core of financial services is the transfer of resources between individuals directly over time, however, behind the sensation of direct transfer, the mobile wallet requires an intermediate to process the transaction between parties, in this case a bank.

DeFi is a general term for a variety of financial applications in cryptocurrency or blockchain that operates without centralized intermediaries or institutions. DeFi enthusiasts are eager to promote efficiency, transparency, innovation and financial inclusion.

According to Nic Carter, a well known advocate of bitcoin and crypto,"The goal of automating the delivery of financial services and reducing human dependencies also has the congruent effect of reducing oversight and control. Disintermediating traditional intermediaries reduces high fees and entry friction, but also creates new opportunities for new types of intermediaries."

DeFi Building Blocks - by Wharton Initiative on Financial Policy and Regulation DeFi takes advantage of various technologies developed in the blockchain sphere. All have applications outside of DeFi, but play essential roles within the DeFi ecosystem. Blockchains: Distributed ledgers serving as the settlement layer for transactions. Currently, most DeFi 5 servicesoperateontheEthereumnetwork,duetoitscapabilitiesanddeveloperadoption. DeFiactivityis growing on and across other blockchains as well. Digital Assets: Tokens representing value that can be traded or transferred within a blockchain network. Bitcoin and other cryptocurrencies were the first blockchain-based digital assets. Others have a range of intended functions beyond payments. Wallets: Software interfaces for users to manage assets stored on a blockchain. With a non-custodial wallet, the user has exclusive control of funds through their private keys. With custodial wallets, private keys are managed by a service provider.

Smart Contracts: Blockchain-based software code that carries out, controls, and documents relevant events and actions according to predefined terms and rules. Decentralized Applications (Dapps): Software applications built out of smart contracts, often integrated with user-facing interfaces using traditional web technology. Governance Systems: Software-based mechanisms that manage changes to smart contracts or other blockchain protocols, often based on tokens that allocate voting rights to stakeholders. Decentralized Autonomous Organizations (DAOs): Entities whose rules are defined and enforced in the form of smart contracts. Stablecoins: Digital assets whose values are pegged to a fiat currency, a basket of fiat currencies or other stable-value assets. Oracles: Data feeds that allow information from sources off the blockchain, such as the current price of a stock or a fiat currency, to be integrated into DeFi services.

DeFi leverages blockchain technology to facilitate alternatives to traditional service providers and market structures. Ethereum or other cryptos can be used for services such as lending in markets created and maintained by automated programmes.

According to the website DeFi Pulse, (crypto) collateral pledged for DeFi-type projects already exceeds $80bn.

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