Decentralized Finance (DeFi) has been all the rage in the last few years. Its unprecedented ability to give individuals control over their own personal finance and empower them to easily invest and earn on their capital cannot be taken lightly.
The decentralized nature of this new system has the power of disrupt and completely change how we manage our own money – and that’s the whole point.
It not only empowers people to take back control, but also acts as a sort of sandbox. A sandbox where anyone can enter and contribute to the ever-growing ecosystem. Its potential is virtually unlimited, with new applications, use cases, and ideas springing up every day from the collective mind of everyone involved.
But how does DeFi plan to take the reigns from traditional finance? The only answer is that it shouldn’t, at least not yet. Instead, DeFi and the dominant financial system should learn to work together. This brings us to interoperability. It sounds cryptic, right? Fret not – it isn’t.
Web2 – a lack of interoperability
Imagine for a second that Web3 as an idea doesn’t exist – forget blockchains, DeFi, and crypto.
We’re firmly in the centralized realm of Web2, where service providers and big tech companies fight for your attention, loyalty, and money.
You are in the center of this fight, and all these companies crave you as their customer. They don’t want to share, they don’t want to let you go, so they keep coming at you with new propositions. The problem is that their system is a closed-off one. It operates in a world of its own, and is therefore limited.
Every new centralized service only increases the amount of existing networks that is cut off from the others and operates according to its own rules and regulations. You’re stuck with them and the services they offer, and they offer them as is.
Let’s now introduce blockchain into the picture. DeFi is not one whole entity, so we could draw parallels with the example above. There are thousands of blockchains, thousands of wallets, tools, services, and products. Is it feasible to use ten of them separately? What about twenty, thirty?
Or is it better to have one app for a whole lot of them?
Interoperability in crypto: a definition
Interoperability enables economic systems to interact with each other and create synergies in order to improve outcome probability. It enables different apps, products, and services to communicate with each other, scaling their code and making them mutually beneficial to each other.
Interoperability is what solves the fragmentation problem – instead of many different walled-off gardens that have something to offer, it allows the separate systems to share resources, data, and users. In a perfect world, blockchains do not operate separately – they work together.
Interoperability thus allows you, the user, to tap into a vast ocean of opportunity without switching apps, networks, or service providers – an interface for interoperability would let you interact with all these chains and Dapps (that’s decentralized apps, i.e. applications built on a blockchain) from the same app, offering limitless potential.
But interoperability should not stop there, because there is another dominant force in finance, and it’s not going anywhere.
Interoperability As a Bridge Between DeFi and Traditional Finance
Cross-chain bridges have started to solve the problem of interoperability between blockchains, but there is still much to be asked for. The same cannot be said about the communication between DeFi and traditional finance – our entire world is built on it, and dependent on it. Right now the communication between your bank and your preferred DeFi or crypto apps looks something like this:
➡️Your crypto is here.
➡️Your DeFi apps are here.
➡️➡️➡️➡️➡️➡️➡️Your bank is waaaaay over here.
This displacement makes it very hard for users to use the one with the other. Buying crypto with national currency, or selling crypto for it and then withdrawing it from a CEX or a DeFi wallet to your bank account is complicated, slow, and nerve-racking. One mistake could mean a loss of funds.
Still, DeFi relies on traditional finance – there is no question about that – therefore a bridge is needed between the two.
Something that looks like this: DeFi ⬅️➡️ ️Crypto ⬅️➡️ ️Banking
Interoperability: The Changex Way
In order for interoperability to work and act as one universal language used between the worlds of finance, Changex is integrating traditional banking into its non-custodial DeFi wallet.
This is what you get:
- Crypto – being multi-chain by design, the Changex wallet allows us to integrate all the right blockchains and to provide you with access to assets and Dapps built on them. Binance Smart Chain, Polygon, HydraChain, and Ethereum for starters, with more to come.
- DeFi – harnessing the power of DeFi, the Changex ecosystem will provide a suite of powerful, yet easy to use investment options and passive income tools. Staking, lending, first-ever Leveraged Staking, and more options will let you take control of your money.
- Traditional banking – a personal IBAN with access to SEPA and a Crypto Debit Card allow you to seamlessly cash out to your bank account, invest more, or use any cryptocurrency as a payment method as you would normally use your Euro.
With this suite of services, one app is all you’ll ever need. Easy entry into crypto, more ways to earn, access to thousands of projects and investment opportunities, and unique ways to utilize your crypto in the real world.
We’ve got most of the things we talked about up and running as we speak.
Thanks for reading,
The Changex team