FORWARD FROM THE AUTHOR
When I first arrived in Southeast Asia from San Francisco in 2018, I was quite bullish on the potential of crypto
networks to “bank the unbanked”. To provide access to financial products to the previously excluded. Over the
ensuing three years, I became jaded. The promise was hallow. Layer 1’s overpromised and under-delivered.
Transactions were slow and expensive. The user experience horrible. The knowledge of decentralized applications
non-existent.
I realized quickly crypto’s “banking the unbanked” narrative was just a schelling point for white collar vest-
wearing coastal elites in the developed world. The real work in providing financial access was done by the
centralized tech platforms – SEA, Grab, GoTo, GCash, Momo, TrueMoney and others – all burning massive sums to
onboard millions of users to replicate the Ant Financial model in their respective markets.
Then DeFi summer hit in 2020. Perhaps I wasn’t wrong. Perhaps I was just early. The rise of Axie Infinity, Yield Guild
Games, Animoca Brands and others in Southeast Asia crystalised the rise of peer-to-peer networks in the emerging
world as more than a distant fantasy…
Still, DeFi penetration remains quite low with MAUs at just ~0.6% of internet users
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. To fulfil its lofty promises, DeFi
will need to make temporary compromises. To propel DeFi into the mainstream globally, there will need to be a
functional middleware which can bridge the decentralized future with the off-chain legal frameworks, the
current monopoly on violence by the state, and people’s lives in the world of atoms. There will need to be
undercollateralized loans underwritten with alternative and on-chain data sets. There will need to be better, simpler
UX. There will need to be easy, compliant onboarding for financial institutions and fintechs.
In short, there will need to be O2O. Fortunately, the revolution has begun.
@Rawson_Haverty
***
Reflection Digital is focused on expanding crypto adoption in APAC. We help institutions navigate the evolving world of
decentralized finance with our lower-volatility fund products and research. We also support teams and communities
building the next generation of the internet. Prior content can be found at reflectiondigital.substack.com including:
❖ Report: Stablecoins in Unstable Times
❖ The Macro Case for DeFi
❖ Tokens: Part 1 & Part 2
❖ Southeast Asia – A Web3 Juggernaut in-Waiting
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Based on ~30m Metamask wallets and ~5b internet users globally
DeFi & the Next-Frontier: On-Chain to Off-Chain (O2O) Lending