In recent years, the world of finance has shifted dramatically with the rise of cryptocurrency and decentralized finance (DeFi.) While DeFi is still in its early phases, it offers a range of benefits for small business owners that traditional financial institutions cannot match. According to Earnity executives Domenic Carosa and Dan Schatt, DeFi can help SMEs (small-sized and mid-sized enterprises) compete and thrive in a marketplace where big businesses typically dominate.
DeFi is often recognized as an alternative means for financial inclusion for underbanked or hard-to-bank businesses. It provides a path for small businesses to access financial systems that they could not in the past. By harnessing the capabilities of DeFi and other blockchain applications, small businesses could experience reduced costs and increased speed in financial transactions.
Moreover, DeFi can facilitate the implementation of cryptocurrency as a means of payment for products and services. By adopting this payment model, small businesses can experience lower transaction fees than the traditional methods, limited occurrences of chargebacks common in credit card payments, and more secured transactions. Giving customers the ability to pay via peer-to-peer methods can also open a business to international markets.
DeFi can also offer some needed funding for small businesses that need capital as there is a mounting number of crypto buyers in the space. In early 2022, the total value locked (TVL) in the DeFi sector reached more than $200 billion. The rapid rise of the TVL entails a sizeable amount of money available for loans to SMEs. Lending to small businesses is also attractive because the peer-to-peer nature of DeFi allows would-be lenders to share the risk with other creditors in the ecosystem.
Earnity, under the leadership of Domenic Carosa and Dan Schatt, seeks to improve people’s access to DeFi products and protocols through the marketplace it is set to launch. The platform will allow users to buy, sell, and trade DeFi assets in a simple, safe, and enjoyable environment.