Why should I try DeFi? What’s next for decentralized finance?

These are some of the questions we posed to Scott Smiley, the “ex-banker-turned-blockchain strategist” and cofounder of Balanced, one of the ICON network’s signature DeFi platforms.

Open and borderless

So, why should I stick my money into a DeFi platform rather than, say, my local bank?

I don’t see any banks letting you borrow against your ICX, or any crypto for that matter,” says Scott. “Let alone at 0% interest.

Many users look to DeFi’s relatively high yields, but Scott notes that DeFi brings so much more, especially to people in developing countries.

DeFi is open and borderless, making it far easier for those in developing countries to have access to debt and leverage, which is the driving force of developed economies,” he says. “Generally speaking, it lets people get leverage against their blockchain-based assets.

Of course, with governments around the world moving to regulate DeFi, some people in the blockchain and cryptocurrency space worry that decentralized finance may lose some of its vitality.

Scott doesn’t necessarily see it that way, though.

Informed regulation is a good thing in order to bring more users into the space,” he says. “However, there will be a true test over time to see who is actually decentralized and who is just claiming to be.

Better UX?

Scott believes UX to be the biggest current challenge facing DeFi, though he also feels Balanced and fellow ICON DeFi platform Omm are striving to overcome the issue.

So, where does Scott see DeFi in the years and decade ahead?

He says, “(I see) much better UX, way more users, way higher TVL, and hopefully more clear and reasonable regulations globally.

An important use case

Launched in April, Balanced — the “decentralized bank of ICON” — is one of the ICON network’s biggest DeFi applications.

As one of the co-founders, Scott pointed to the need to let ICX holders “unlock more value.

I saw a need and an important use-case for all blockchain ecosystems,” he says. “Debt is the driver of developed economies. Debt drives innovation and growth. We needed to allow ICX holders to unlock more value from holding ICX, and do so with a beautiful, easy-to-use interface.

Creating such a use case proved a bit tricky, however, as it involved coordinating at a global level.

All contributors to Balanced are based all over the world,” said Scott. “It was tough getting us all on the same page, setting priorities and shipping a polished finished product. At this point we are much more routine and have a great process set up.

In addition to a great process, the Balanced team also has a great product set up. Scott points out some of the platform’s strengths, including “zero percent interest rates, amazing UX, novel pegging mechanism for bnUSD, well designed token economics (and) excellent governance participation.” 

He adds, “And for ICX holders — and soon others once we add new collateral types — it’s a great option to get cheap leverage.