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The future of DeFi lies in Africa – CEO, Cardano Blockchain



DeFi in Africa

The finance sector is among the most important sectors in a country. Money is needed in the payment of services and goods and it is the sole responsibility of the financial sector to regulate and facilitate movement of funds among people, act as a lubricant to the economy and equally transfer savings and outflows from the spending stream.

In the olden days, buying and selling began with trade by barter, which generally involves exchange of goods by goods. Cowries and animal skins in the stone age, to farm produces and of course the barter system in the agricultural age. Later, a fiat system payment was introduced which is characterised by paper currencies.

Money is controlled by the financial institutions (banks etc) which serves as a middlemen in the transfer of funds from someone to another. The smooth flow of money is one of the many building blocks in the world’s financial system. These financial institutions also help in the procurement of loans, savings, giving financial advice etc.

Despite the huge role performed by these financial institutions, there are limitations faced by these institutions such as lack of coordination, monopolistic market structure, inactive capital market, frauds, high interest rates, which pose threats to the economic growth of developing countries. This led to the disruptive innovative idea- an alternative finance system called Decentralized Finance (DEFi).

DeFi Explained

Decentralised finance is an open finance system that does not require a central entity such as brokerages, exchanges, or banks. The system is based on cryptography (cryptocurrency).

This type of finance ensures the merging of traditional bank services built on decentralized blockchain technology,which, in turn, triggers an open source, permissionless, flexible and transparent financial ecosystem.

UNISWAP: An example of DeFi

A good example of DEFi is Uniswap. Uniswap is an exchange built on the ethereum blockchain, which runs on a smart contract. It makes use of a mechanism called Automated Market Making, to automatically settle trades near the market price.

Uniswap is quite different from popular exchanges such as Binance. Also, any user can be a liquidity provider by providing liquidity in form of cryptocurrency to the uniswap smart contract and earning a share of the exchange fees known as pooling.

Africa is the Future of DeFi, Says Cardano Blockchain CEO

The CEO of IOHK, the developers behind the Cardano Blockchain, revealed that Africa is the future of DEFi during his YouTube missives. He states that:

Who will be the consumers of DeFi? Who will be in the need of identity systems and payment services and new ways of representing equities? Will it be the ossified, highly regulated markets of the western world, which are invitation-only […] or will it be the agile and nimble countries of Africa, Southeast Asia, who have no incumbencies and are desperate to compete and thus, are open and friendly to retooling and ideas? Given that the human capital, physical capital, and economics are all moving in the right direction, it is my belief that Africa will be the most promising economic environment in the next ten years.”

Charles Hoskinson, CEO, Cardano Blockchain

He further explained that there is $5.6 trillion locked up in DeFi across Africa and the Cardano Team is going to play a major role in capturing that value.

How will Africans benefit from DeFi?

Currently, in the crypto space, attention is being shifted to Decentralized finance. DeFi promises to bring the idea of traditional financial services back to the blockchain. Here are some of the benefits:

Borrowing and Lending: 

DeFi borrowing and lending is made easy due to the simple, transparent and secure platform. Loans can be easily obtained by Africans without collateral and zero or little compound interests. 

DeFi eliminates middlemen, thereby, making transactions and movement of funds easier and faster. This open-source attribute of DeFi helps promote innovation and encourages healthy competition, something that the cut-throat financial services industry desperately needs.

Financial Data:

The financial institutions such as banks have access to the financial data of their customers, in which this data can be sold, exposed or hacked by external agents. This data is also being controlled by a small group of individuals which can lead to monopoly and control pricing.

With decentralised finance, all these aforementioned problems are solved. DeFi will ensure that customer’s data is democratized and secured, and it will create a rewards system that incentivizes market participants.


DeFi insurance platforms can help lessen risk. This insurance can be applied to digital wallets and smart contracts that are used to pool money for lending and staking.

There are several DeFi insurance providers that are all helping to create an ecosystem that is based on openness and accessibility. Their goal is to eliminate costly traditional insurance agencies that run as monopolies. This makes insurance more affordable and flexible to Africans.

About Cardano Blockchain

Cardano Blockchain is an open-source decentralised public blockchain and cryptocurrency project. It is the first blockchain platform to evolve out of a scientific philosophy and a research-first driven approach.

Cardano Blockchain is built in layers, a feature which promotes a flexibility that can be easily maintained and upgraded through soft forks. It has a unique approach to cryptocurrency which provides scalability and total security by having a layered architecture

The goals of Cardano’s developers are to introduce a more secure way to conduct business, to provide the world’s unbanked population with access to financial services, and to also provide security and sustainability specifically applied to the dapps sector.

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Crypto Assets

Crypto prices drop as global market fear increases



Top cryptocurrency prices have fallen amidst a drop in stocks and fears over China’s Evergrande debt crisis. In the last 24hour, Bitcoin dropped from $47,772 to $42,630 shedding about 8.58%. this is the lowest in price since another bull run began on Sept 5 after the April crash.

El- Salvador’s President, Nayib Bukele sees the fall as an opportunity to invest more. Recall that the country adopted Bitcoin as a legal tender on September 7. Despite the adoption, the price of Bitcoin has fallen by almost 14% since then.

Other coins have experienced dramatic crashes within the last 24hours. Solana, a coin that has experienced 355% growth within the last 3 months fell from $162 to $130 shedding about 11.39% within the last 24hours. Solana’s fall may be categorized by the 17-hour outage which the founder, Anatoly Yakovenko said was caused by bots “flooding the networks”

Ethereum fell by 9.37% while Dogecoin and Axie Infinity fell by 11.22% and 14.14% respectively within the last 24hrs hours. While crypto experiences dark Monday, El-Salvador keeps investing more money in Bitcoin.

A look at the global market

The global market is experiencing fear due to the Evergrande debt crisis. A report published by the University of Michigan shows that consumer’s sentiment is beginning to decline. This trend alone may impact the crypto market as well.

On the other hand, the global market downturn must have been spurred by the Evergrande debt crisis. The company grew to be one of China’s biggest companies by borrowing more than $300bn. Last year, Beijing made rules to control the debt owed by big real estate developers. This led Evergrande to offer its properties at major discounts to raise more money to keep the business afloat. Right now, the company is struggling to meet the interest on payment of debts.

Why would it matter if Evergrande fails?

The collapse of the multi-million dollars company would affect the global market; including the crypto market. Many people bought properties from Evergrande and they expect to make gains. If Evergrande falls, crypto investors will be forced to withdraw more money to keep their business running without the means to invest more. When one business fails, the other gets affected indirectly. This also applies to other firms that do businesses with Evergrande.

The potential impact on China’s financial system is another effect of Evergrande’s fall. In his statement to BBC, Mattie Berkink, the Economist Intelligence Unit (EIU), said that “the financial fallout would be far-reaching. Evergrande reportedly owes money to around 171 domestic banks 121 other financial firms” if the company fails, other lenders or businesses may be forced to lend less. Thereby leading to a credit crunch- a situation where companies struggle to borrow money.


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Bitcoin in Africa

The rise of CBDC in African economies



Many nations have taken cues from the world of crypto and its resounding successes over the last decade. In order to avoid getting left behind, governments worldwide are increasingly turning their attention towards implementing some form of digital currency, a CBDC which in full is Central Bank Digital Currency. Although inspired by cryptocurrencies, CBDC’s are quite different from traditional crypto platforms. The main differences are that CBDC’s are unlikely to be decentralized, the supply of this currency regulated by the host’s country’s central bank as the CBDC is designed to operate as a sovereign legal tender, the digitized form of the host country’s fiat currency. Thus, a central bank may issue digitized tokens of its currency of which their value is pegged to the fiat currency of the nation in question, making CBDC’s stablecoins.

Africa has seen a rise in the use of cryptocurrencies and it’s still pushing frontiers in this sector. Although the use of crypto in many African nations is becoming more and more pervasive by the day, the tone of governments in many of these countries toward the sector is cautious at best and threatening at worst. However, a few nations have voiced interests in creating digitized versions of their legal tender to function as a CBDC. Amongst these are Ghana, Nigeria, Morocco, Kenya and Tunisia.

Many of these projects are still in the research phase or developmental phase however. A good example is Ghana’s proposed CBDC, the E-cedi being developed in partnership with German company, Giesecke + Devrient. Nigeria’s CBDC project, the eNaira has been announced and according to Nigeria’s central bank, this CBDC will be launched sometime in 2021. To that end, the CBN has partnered with fintech company, Bitt Inc. to serve as the technical partner in the eNaira’s development. Reportedly, the CBN had made the decision to digitize the Nigerian Naira in 2017.

While the pursuance of digital currencies in African nations is a welcome development, implementation of these schemes isn’t without challenges. Chief among the issues countries in Africa face would be the already existing financial service inequality and poor penetration of internet access in the continent. These challenges must be tackled in order to allow for mainstream adoption of CBDCs and the subsequent provision of financial inclusion. The benefits largely depend on the peculiarities of the nation deploying them. For instance, a digital currency is thought to help Nigeria increase foreign remittances, it’s second largest source of forex after oil. Whatever the outcome of these projects, it is becoming apparent that CBDC’s have come to stay.

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Decentralize Brief

Bitcoin trades above $51k ahead of El Salvador’s adoption



Bitcoin growth

Bitcoin price has rallied above $51,000 ahead of El Salvador’s adoption. The immediate surge in price may be due to the social media campaign that everyone should buy sats of Bitcoin to support El Salvador’s plan to make the coin a legal tender or it may be due to the news of El Salvador’s adoption of the coin as a legal tender on September 7. Users of social media platforms like Twitter and Reddit are discussing how they will buy Bitcoin of $30 each to mark the new El Salvador Bitcoin law.

The surge in Bitcoin’s price began in the last 24hrs with the price rallying around $51,955 with a 3.37% increase. This is an all-time high after the April crash that brought the price of Bitcoin from $64k down to $28k. The move by El Salvador to be the first country that accepts Bitcoin as a legal tender and the social media campaign that leads to a surge in price ahead September 7 are a repetition of events that occurred late last year and early this year with regards to institutional investors and how the price of Bitcoin skyrocketed.

El Salvador, a country in Central America, has been preparing heavily to adopt Bitcoin by installing ATMs to allow citizens to convert the token into US dollars. Last week, the country’s Legislative Assembly passed a law to allow for the creation of a $150m Trust to support the conversion of Bitcoins to US dollars.

To promote the use of Bitcoin, the government states that it will give the adult population of El Salvador $30 in Bitcoin once they download “Chivo” the wallet issued by the government. This was confirmed by the Finance Minister, Alejandro Zelaya.

What this means for Bitcoin investors

Apart from the adoption by Salvadorians, on-chain analytics show that Bitcoin is in high demand. The fourth halving that occurred will make Bitcoin become a scarce token in the nearest future. Thereby increasing the price sporadically.

With El Salvador’s interest in Bitcoin, other countries are likely to follow suit- Panama is considering following El Salvador’s lead. History will repeat itself as this development will serve as another crypto rout that occurred early this year when Tesla and MicroStrategy announced their support for Bitcoin.

El Salvador’s new law allows the use of Bitcoin as a legal tender it can be used to buy goods, pay for taxes and bank loans. This means more demand for Bitcoin, with the fourth halving that occurred, it means less supply. A common rule of economics for demand and supply will apply. Prices are projected to keep rising. At the time of writing this report, Bitcoin is trading at $51,839 with a projection of $52k before the end of today and higher tomorrow when Salvadorians begin to use the token.

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