DeFi offers a permissionless and borderless way to send money peer-to-peer (P2P), without relying on traditional financial institutions as intermediaries. It is about removing intermediaries from financial services using blockchain technology and smart contracts. This allows for the creation of open digital payment protocols that anyone access. To send a P2P payment via DeFi, all you need is a crypto wallet compatible with the DeFi payment protocol you want to use.
- The sender funds their wallet with cryptocurrency.
- The sender specifies the recipient’s wallet address on the DeFi payment platform.
- The payment platform facilitates the secure transfer of crypto between the sender’s and recipient’s wallets.
- The recipient chooses to cash out the crypto to fiat money if they wish.
DeFi P2P payments
Banks and money transfer operators typically charge high fees for cross-border transfers. DeFi transactions cost a fraction of that amount. For example, sending $1000 via Western Union from the US to Europe costs up to $76 in fees. The same transfer via DeFi would cost just a few cents or dollars. International bank wires take 3-5 business days to settle. DeFi payments settle in minutes or seconds since they don’t rely on slow interbank settlement processes. This enables near real-time delivery of funds to the recipient.
Censorship resistance
DeFi protocols are decentralized and no single entity controls them. This makes censorship of transactions very difficult. Payments will reliably execute as code in the protocol. With banking systems, governments can freeze accounts or block recipients. Billions of people globally lack access to traditional banking and payment services. DeFi is easier to use – all you need is an internet connection and a crypto wallet. Geographic limitations and documentation requirements are minimized. Transactions on most DeFi payment platforms are publicly verifiable on the blockchain. This provides transparency and accountability. Users inspect on-chain activity themselves.
Use cases and adoption
While DeFi-based P2P payments are still a nascent industry, adoption is accelerating driven by the above benefits.
- International remittances – Workers sending money back to families in their home countries avoid high fees from incumbents.
- Freelancer payments – Freelancing has gone global. DeFi allows employers to pay freelancers abroad without friction from the banking system.
- Donations – Charities receive donations directly without intermediary fees cutting into contributions.
- eCommerce – Merchants access faster and cheaper payment settlement. Crypto also solves the issue of card fraud.
retik finance DeFi payment platforms are beginning to see surging transaction volumes indicating steady adoption. It has unlocked the ability to transmit money worldwide quickly, cheaply, and across borders with just an internet connection. It provides the rails for a new financial system that is global, open, and accessible to all. While adoption is still early, DeFi-powered P2P payments could fundamentally change how money moves around. Their benefits make them a compelling alternative to legacy payment infrastructure for the borderless economy of the future.
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