What Are the Uses of DeFi? Smart Patrimoine

During the Smart Patrimoine program broadcast on B Smart 4 Change, Alexis Bourdillat, founder of Readi, explored the uses and mechanisms of decentralized finance (DeFi) in Europe. His intervention, aired as part of L'Echo des Crypto, highlighted the advantages and risks of this financial innovation that is revolutionizing traditional banking services.

Decentralized Finance (DeFi) relies on blockchain technology to eliminate traditional intermediaries such as banks. It enables transparent, immutable, and public transactions, recreating traditional financial services (currency exchange, lending, deposit management) in a decentralized manner. Users can provide liquidity to facilitate crypto-asset exchanges and receive yields in return.

One of the key aspects of DeFi lies in secured lending systems. Unlike traditional bank loans, DeFi loans require over-collateralization. For example, a Bitcoin deposited as collateral allows borrowing up to 75-80% of its value. In case of a price drop of the asset, an automatic liquidation of the collateral is carried out to protect lenders and limit default risks.

The returns on these loans vary between 5% and 12%, depending on market conditions, offering an attractive alternative to traditional financial investments.

Despite its potential, decentralized finance presents significant risks, particularly in terms of liquidity, volatility, and protocol security. Readi's expertise lies in the daily analysis of these risks and the implementation of monitoring and mitigation solutions.

Europe currently has around 7 million DeFi users, according to recent data published by European financial supervisors, EBA and ESMA. They have highlighted the evolution of DeFi and its impact on the financial system, as well as the need for a better understanding to encourage safer adoption.

As Alexis Bourdillat pointed out, its development depends on a better understanding of the risks and opportunities it offers. Education and regulation will therefore be the keys to its wider adoption.

With constantly evolving prospects, decentralized finance could well become one of the pillars of the finance of tomorrow.