Open Finance, DeFi & RSK: A Definitive Guide
Over the last two years and specially along 2020, Open Finance has emerged as one of the most promising use cases of blockchain technology. Courtesy its potential to transform traditional financial systems, Open Finance has piqued immense enthusiasm at almost every level of the crypto community, including developers, investors, and even amateur users.
In general, DeFi’s popularity is backed by substantial reasons which we shall discuss in the course of this article. However, to fully grasp the scope of decentralized, open financial systems, it’s crucial to note that they enable the global unbanked population—nearly 1.7 billion adults, based on World Bank’s data from 2017—to access financial services that have hitherto been denied to them, simply for the lack of a bank account. Considering the fact that such services are increasingly taking up a central role in global economies, the exclusive nature of traditional finance presents us with a rather grim situation.
As such, it’s undeniable that advancements in Fintech have massively improved the overall user experience offered by the banking and finance sector. Yet, such advancements have often failed to address some of the more fundamental concerns that face the users. Above all, traditional processes imply substantial threats to the user’s sovereignty and autonomy, while centralized entities control almost every aspect of these systems.
Embarking on a mission to resolve the crises of centralized finance and to financially liberate the user, DeFi is often deemed as a “financial revolution”. In this exhaustive guide, we discuss every major aspect of DeFi, including its benefits over centralized finance. We shall also discuss how RSK—a Bitcoin sidechain that supports Smart Contracts—is contributing variously to the rise of DeFi, primarily by bringing Bitcoin into the landscape of Open Finance.
Index
The Problems of Centralized Finance
Unequal & Inadequate Access
Censorship & Control
Inefficiency & Cost
What is Decentralized Finance (DeFi)?
The Technical Pillars of DeFi
Smart Contracts
DApps & DAO
Stablecoins
Atomic Swaps & Oracles
DeFi vs. CeFi: The Advantages of Decentralized Finance
Global Access
Autonomy & User’s Control
Algorithmic Compliance
Censorship Resistance
The Major Use Cases of Decentralized Finance
Lending & Borrowing
Decentralized Trading & P2P Marketplaces
Financial Services & Fund Transfer
The Challenges and Shortcomings of DeFi
Scalability
Smart Contract Vulnerabilities & Security Concerns
Performance & UX Shortcomings
Learning Curve
Decentralized Finance on RSK: Incorporating Bitcoin into DeFi
RIF on Chain (RoC) & Money on Chain (MoC)
RSK Swap
Some Other RSK-Based DeFi Solutions
Conclusion
The Problems of Centralized Finance
If one wishes to fully grasp the significance of DeFi, they must begin with a proper understanding of the fundamental issues with traditional, centralized financial systems. As such, even the simplest of financial transactions—say, sending money to a friend—that one can complete with a “single tap”, has a lot going on behind the scenes. The framework that supports these systems involves multiple facilitating intermediaries, such as governments, banks, payment gateway providers, brokers, agents and a whole range of service providers.
For instance, in the above example of sending money to a friend, one has to rely upon a government that issues the currency involved, at least two banks (sender’s and receiver’s) that oversee and facilitate the transaction, and a third-party payment application or gateway. In fact, this is by far the least number of entities that could be involved in the process, and in the case of a real-world transaction, there’s almost inevitably more entities as middlemen. This is not only true of sending/receiving money, but of every conceivable financial service, including lending, borrowing, trading, and so on.
Historically, the lurching demons of CeFi have been categorically exposed in such instances where governments have printed notes at will, eventually resulting in rampant inflation. Similarly, there have been market crashes, frauds, scams, and so much more. Primarily, this is due to the siloed nature of centralized financial systems, wherein too much power and control is vested in the hands of one or few entities. In other words, these systems often have a ‘single point of error’, while ulterior profit-making motives worsen the situation even further at times. Having said that, the following are some of the specific problems that emerge due to the function and structure of traditional finance.
Unequal & Inadequate Access
To access financial services, one must also have access to banking or other institutions such as insurance providers and so on. In turn, this entails the ability to meet the stringent requirements for regulatory and other policy-related compliance. Now, this is a major problem for many, especially for those coming from underdeveloped or developing communities who often don’t have proper documentation to prove their identity and so on.
Considering the fact that access to financial services is arguably a crucial marker for social progress, the excluded population remains stuck in a sort of vicious cycle. Over time, this is emerged among the most pertinent of social problems, as the gap between the rich and the poor continues to widen rampantly which ultimately has a very negative impact on the lives of a majority of the world’s population. Moreover, the inaccessibility of services like insurance or loans has even led to the loss of life and livelihood for many around the world, especially in the USA.
Censorship & Control
The fortunate lot that has access to traditional finance faces yet another category of problem, vide the lack of meaningful privacy and control. As previously mentioned, traditional financial systems are owned, governed, and managed by centralized entities. These entities have complete control over the rules of the game, so to say, and can very well twist them according to their own interests. That this isn’t mere conjecture or some unfounded paranoia is substantially proven by past instances of inflation, scams, and frauds.
Traditional finance is also very opaque, in the sense that end-users have little or no say in how banks use the money in their savings accounts. Moreover, users don’t get a share of the high interests and profits that banks often earn by lending the money they deposit. Arguably, the situation is extremely unjust, especially in the context of the sovereignty of monetary ownership.
Another corollary of financial systems being centrally governed is the possibility of censorship and espionage. Governments and financial institutions can have unrestricted access to the user’s personal and financial data, which can in turn be leveraged for political or financial gains. Furthermore, centralized financial systems mostly store their data and funds in centrally located servers and vaults. Despite security measures being in place, this architecture heightens the risks of large scale security and privacy breaches—from loss of funds to public exposure of sensitive information.
Inefficiency & Cost
Innovations in fintech has undeniably made the sector more “seamless” and easy to use, while also expanding the scope for functionalities. However, despite such progress financial process remain deeply inefficient at their core, especially in the context of cross-border settlements.
Transferring funds within banks in different geopolitical locations requires around a week’s time to complete, let alone the immense formalities and paperwork that they often involve. In fact, certain domestic transactions also take 2-3 days for processing, even in today’s world of “one-touch” solutions. Moreover, at times when some problem arises in the process, the user has to put in a considerable amount of time for getting it resolved.
Apart from time, traditional financial systems also subject the user to multiple levels of overhead costs. Primarily, this is due to the fact that the sector is intermediary-ridden, each of which adds its share to the overall cost of any financial service. This covers facilitation charges, commissions, brokerage, and so on. In other words, the cost of any financial product partially or fully includes every intermediary cost involved in its production. While making some merchant payment, for instance, the user often has to bear a substantial payment gateway and/or processing fee which, in effect, adds to the overall cost of the product being purchased.
What is Decentralized Finance (DeFi)?
Decentralized Finance or DeFi is the vision for a transformed financial paradigm for the future. Leveraging blockchain, cryptography, and other peer-to-peer technology, DeFi aims to resolve the inherent crises of centralized finance, while innovating unprecedented avenues and solutions. So much so, that crypto enthusiasts often perceive DeFi as a financial revolution—a movement that could revolutionize banking and finance at the very core.
As the name suggests, decentralized finance doesn’t involve any central governing authority, but is rather governed by a community in a distributed manner. Furthermore, data and funds aren’t stored centrally, but are recorded on blockchain-based shared ledgers. Later in this article, we will discuss technical pillars of DeFi in detail, which would give the reader an in-depth idea of how it works. Presently, it could help to have a brief insight into the history and rise of DeFi.
Essentially, the journey officially began with the release of Satoshi Nakamoto’s Bitcoin whitepaper in 2008. Launched as a self-sustaining, peer-to-peer money shortly after, Bitcoin was indeed among the first innovations to give tangible form to the DeFi dream. It proved to the world that, after all, it is actually possible to have secure transactions without involving any overseeing or facilitating intermediary.
Inspired by this initial spark, distributed computing platforms such as Ethereum have been facilitating an entire body of decentralized financial solutions, namely smart contracts and decentralized applications (dApps). On the other hand, the likes of RSK and RIFOS have diversified the space further, not merely by creating the building blocks for DeFi, but more importantly, by bringing Bitcoin into the current DeFi space.
The Technical Pillars of DeFi
Equipped with a working knowledge of what DeFi is and how it came into being, let us now focus on the technical pillars on which DeFi stands. However, it might help to take a slight detour to point out the fundamental differences between the working of DeFi and CeFi.
First, no single entity controls a decentralized financial network. On the contrary, they are governed and managed by a globally distributed community of users. In the case of private or consortium blockchain-based DeFi ecosystems, there is a separate body of users that have sole control over certain aspects of the network. However, even then, such entities do not control the system’s overall functioning and cannot bend the rules at will. In other words, DeFi systems can have varying degrees of decentralization, but are ultimately and majorly user-controlled.
Second, DeFi systems don’t involve “trusted intermediaries”, replacing them with automated, self-compliant, and encrypted algorithms. In other words, there is an emphasis on validation, rather than trust. In turn, this ensures manifold benefits which we shall discuss later. Presently, let us get back to DeFi’s technical framework.
Smart Contracts
In simple terms, a smart contract is a self-executing and computerized algorithm that can automatically trigger certain actions based on predefined conditions. As such, smart contracts play the same role as traditional contracts or agreements, except that they don’t require any third-party overseer. Instead, they automate the process using codes and cryptography.
Being deployed on a blockchain, smart contracts are effectively tamper-proof, meaning that no party can alter the terms once they have reached an agreement. In this sense, smart contracts are very much the cornerstone for the trustless financial ecosystem that the proponents of DeFi envision. Originally, Ethereum was the only platform with smart contract functionality, but presently RSK facilitates the same for the Bitcoin community. In fact, the space is presently more interoperable than it was in the initial days.
DApps & DAO
To have a fully functional DeFi system, there has to be Decentralized Applications or DApps, using which, users can interact with DeFi solutions. In terms of functionality, DApps are similar to traditional applications. However, instead of the being hosted on centralized servers, they run and store data on a globally distributed network of computers. As such, DApps are essentially smart contracts designed to meet specific end-user needs. In this regard, they can interact with other smart contracts for extended functionality.
Backed by this inherent interoperability, multiple DApps and other smart contracts can be linked together to form holistic organizations known as Decentralized Autonomous Organizations or DAOs. In effect, these are blockchain-based decentralized counterparts of traditional financial institutions and can function as banks, lending service providers, and so on. Instead of adopting the hierarchical structure of centralized organizations, DAOs have a structure that is more horizontal and thus enable greater user participation in their processes.
Stablecoins
Driven by demand-supply metrics, ordinary cryptocurrencies have immense volatility in prices, which significantly hinders their applicability for several day-to-day use cases. For instance, it’s often not possible to make merchant payments with an asset whose price can fluctuate massively over the day. In other words, the volatility of cryptocurrencies problematizes their adherence to standards that are essential for financial stability.
Backed by real-world assets and/or fiat currencies, stablecoins combine the upsides of cryptocurrencies with those of stable assets like gold. Since their value is determined by the underlying asset, stablecoins are non-volatile and compatible with standardized monetary functions.
Atomic Swaps & Oracles
Primarily based on smart contracts, atomic swaps present a decentralized, automated, and trustless way of exchanging one crypto-asset with another. In doing so, they facilitate fully peer-to-peer (P2P) buying, selling, and trading of cryptocurrencies, wherein the involved counterparties directly interact with each other. Furthermore, atomic swaps significantly enhance the cross-chain interoperability of DeFi ecosystems, enabling the conversion of coins between blockchains.
DeFi also uses Oracles to securely connect events in the real-world with those on the blockchain. Using this technology, it’s possible to trigger on-chain actions based on off-chain events. As a whole, this makes blockchain technology more relevant for practical uses, especially by introducing the much-needed interoperability into domains where there was none.
In this context, it’s crucial to note that DeFi isn’t merely about P2P transactions—Bitcoin can tackle that well enough on its own—but rather speaks of end-to-end financial systems. Thus, both atomic swaps and oracles become extremely important elements in the journey towards achieving the desired end. Unlike the majority of Fintech solutions which only cater to specific financial processes, DeFi’s scope includes earning, spending, saving, lending, borrowing, buying, selling, trading, and so on.
DeFi vs. CeFi: The Advantages of Decentralized Finance
Based on our understanding of the general composition of DeFi ecosystems, let us now focus on the advantages that they bring for end-users. To realize DeFi’s significance, one must read what follows while bearing in mind the previously-discussed problems of centralized finance.
Global Access
Contrary to traditional finance, DeFi ecosystems are mostly permissionless, meaning that anyone can access these solutions upon meeting the minimum requirement of an internet-enabled device. Furthermore, these systems are not bound by or limited to geographical locations, meaning that they are accessible around the world, unless any competent regional authority passes a legislation banning their use.
Since they don’t involve banks, DeFi extends financial access to the vast global population that doesn’t have a bank account. Understandably, such inclusivity could indeed be marked as a radical and necessary transformation, not just in terms of economic prosperity but also in terms of social justice.
Autonomy & User’s Control
In the absence of a central governing authority, DeFi users are autonomous entities with control over not only their funds, but also their data. Primarily by using public-key cryptography, users can encrypt the information related to the asset being transferred—amount, wallet addresses, and so on—as well as personal information which represents the user’s identity. Therefore, one can access this data only after acquiring explicit permission from the owner, especially in the case of personal information.
Furthermore, since most DeFi systems are governed through distributed consensus, users have a direct say in matters of upgrades and modifications, as well as in other aspects of the solution. So much so, to make any changes to a DeFi protocol, there has to be a majority-consensus among the users.
Algorithmic Compliance
In the context of centralized finance, a primary role of the intermediaries is to ensure that processes are in compliance with the existing regulations. This is a major reason why such entities are extremely powerful, which in turn, heightens the scope for corruption, manipulation, and forgery, among several other effects.
On the contrary, DeFi systems are inherently compliant, in the sense that they embed the rules into the code. In order words, DeFi processes can go through if and only if they comply with certain predefined terms and conditions. For instance, say, if A gets X amount of money, Y amount goes to B’s account—this condition can be built into the smart contracts, and thus, cannot be tampered with later.
Censorship Resistance
Centralized financial systems enable censorship in two ways. One, the ecosystem’s governing authority censors the users of its own accord. Two, the government or any of its authorized subsidiaries censors the users activities by influencing or compelling the ecosystem’s governance. Either way, it’s noticeable that having some form of centralized governance makes censorship easier to impose.
In the case of DeFi, both governance and user interaction is distributed globally, meaning that there is no single point of failure that can be censored. Indeed, governments can still ban any particular DeFi solution, but apart from such extreme measures, they cannot censor the user’s activities within a DeFi ecosystem. Therefore, DeFi can resist censorship to a great extent, even if it’s not absolutely immune.
The Major Use Cases of Decentralized Finance
So much for the definition, composition, and advantages of DeFi. By now, we have gained a substantial knowledge of what goes into the formation of DeFi ecosystems. With that in mind, let us presently discuss the ways in which DeFi solutions are being used or can be used in the future.
Lending & Borrowing
Presently, decentralized lending and borrowing protocols feature among the most commonly-used DeFi solutions. Apart from the popularity of the likes of MakerDAO, Compound, Money On Chain, etc. the spotlight on DeFi-based lending is also due to some of its critical advantages over the traditional counterparts.
First, the possibility and range of asset classes that can be lent or borrowed using DeFi is huge, and literally unimagined in traditional finance. For instance, real-world assets, say an artwork, can be tokenized and their value represented on the blockchain, and in turn, function as a digital asset available for lending.
Second, fungible crypto-assets can be represented as fragments with equal value—for instance, Bitcoin can be represented as Satoshis, and so on. Consequently, it’s possible to have fractional ownership and transaction of such assets. In turn, this facilitates micro-lending like never before. Combined with minimal onboarding requirements, this significantly reduces the barriers to entry, ensuring broader access to loans and ultimately greater financial inclusion.
Third, the elimination of intermediaries translates to lower overall costs for end users. Moreover, loans can be settled much faster than with traditional systems, while also leveraging cryptography to minimize counterparty risks and defaults. On one hand, lenders can generate passive income from their assets without indulging in outright sale, while on the other, borrowers enjoy competitive interest rates and enhanced flexibility of loan conditions.
Decentralized Trading & P2P Marketplaces
Innovations in DeFi facilitate decentralized exchange protocols and P2P marketplaces, wherein crypto users can buy, sell, or trade their assets. A majority of these protocols leverage atomic swaps and are non-custodial, meaning that users retain full control over their asset’s private key. This reduces the risks of crypto-based trading, as compared to centralized exchange platforms.
Decentralized marketplaces, on the other hand, can be accessed by individuals and enterprises alike, offering them a secure ecosystem for issuing and using project-based crypto assets and services. Presently, open financial marketplaces not only represent a space for ordinary cryptocurrencies, but also accommodate Non-Fungible Tokens (NFTs) which are mostly designed as collectibles such as CryptoKitties. The gaming industry is one of the major takers of such crypto assets, and thus, can derive substantial gains from robust secondary markets.
Both decentralized exchanges and marketplaces can be accessed by blockchain-based startups and enterprises to bootstrap liquidity for their tokens. In this sense, the platforms in question strengthen the scope for mainstream adoption of cryptocurrencies, as well as of blockchain technology.
Financial Services & Fund Transfer
DeFi ecosystems are not limited to lending, borrowing, or trading and be used to provide an entire corpus of financial services, including insurance, mortgage, and so on. Furthermore, they can also facilitate secure and non-speculative means of investments such as bonds.
The issuance of crypto-based assets—security tokens, utility tokens, and other forms of tokenized equity—also falls under the ambit of decentralized finance. Not limited to but including ICOs, STOs, and the likes, DeFi offers a space for business and investors to connect with one another, without involving any additional third-party. DeFi’s feature of automated compliance comes increasingly handy in such situations, thereby securing both enterprises and investors.
Apart from the aforementioned use cases, it remains to be mentioned that DeFi retains the original purpose of cryptocurrencies—P2P money. In other words, crypto assets can be used to transfer funds between parties, unbridled by geographical barriers. As compared to traditional finance, DeFi-based transactions are settled much faster, especially in the case of overseas transfers.
The Challenges and Shortcomings of DeFi
So far, we have discussed the positive aspects of DeFi and it might as well seem that it’s infallible. That, however, is not the case, as it isn’t with any other technological paradigm. Having said that, it must also be noted that most of the shortcomings being discussed in this segment aren’t necessary flaws of DeFi ecosystems, but outcomes of their nascence. On the bright side of things, research and innovations are already underway at pace, while promising solutions are being tested with impressive results.
Smart Contract Vulnerabilities & Security Concerns
After all, smart contracts are blocks of code and the possibility of having bugs remains, even when developed by experts. In other words, it’s impossible to rule out the fact that humane errors can creep into the best of codes, no matter what. Of course, these can be rectified with due testing, but until then, the vulnerability remains.
Vulnerabilities in smart contracts can be breached by hackers, and thus, present security risks for users who can lose their funds. In the past, the infamous DAO attack of 2016 has been an evidence of such a situation.
Furthermore, the fact that DeFi ecosystems are mostly permissionless also has a flip side. Banking on the minimal barriers to entry, scammers often take to these platforms and dupe users into investing in fake coins and tokens. In this regard, it ultimately falls upon the user to review and study the coins which they are investing in, especially in the case of new projects.
Performance & UX Shortcomings
DeFi comes at a time when users expect seamlessness from financial tools and services. However, a majority of the existing open financial solutions have lagged behind in this regard. Partly because of the scalability factor mentioned above, existing DeFi-based services and platforms have not been able to achieve the performance and user experience to which users are accustomed.
Nevertheless, concerns regarding the performance and UX of DeFi solutions is purely because of the technology’s nascent stage. In fact, several DeFi projects have already caught up on the UX front, and it’s not long before they do so with respect to performance.
Learning Curve
DeFi is new and most people have little or no idea about what it entails or how it works. Moreover, similar to most early-stage technologies, users require some level of technical understanding, especially to protect themselves from missteps or wrong decisions.
For instance, in order to send funds, one has to use complex wallet addresses which look somewhat like this—0x656fg6h…till 60 characters. This not only makes the process rather difficult, but also heightens the risk of mistakes in input which would ultimately result in an irretrievable loss of fund. Although solutions for Blockchain Domain Names are already available, they aren’t yet being used widely.
Therefore, as a whole, to effectively and safely use existing DeFi offerings, the user has to pass through a substantially steep learning curve. As such, this is highly time-consuming, but more importantly, it is not possible for all people to study and learn the technicalities of the technology. Moreover, the present state of the DeFi ecosystem is quite fragmented, meaning that there is little or no standardized body of knowledge from which users can learn. In other words, the leaning process becomes even more difficult since one has to work their way through multiple, often-contesting accounts and literature.
Decentralized Finance on RSK: Incorporating Bitcoin into DeFi
As mentioned before, DeFi is not merely about specific solutions, but envisions a holistic financial paradigm. Sharing this vision, RSK has embarked on a journey towards diversifying the DeFi space by incorporating Bitcoin-based solutions into the open financial landscape. Backed by RIFOS and others, the idea is to create robust building blocks that are interoperable and can support end-to-end financial systems.
Imagining a wide horizon for the future of the DeFi movement, RSK’s approach is to facilitate a framework which shall be self-sufficient and self-sustaining, as well as interoperable with other Web3 solutions that are to come. In doing so, RSK realizes the need for ease-of-access, and thus, strives towards developing user-friendly solutions and services.
Furthermore, the RIF Libraries provide reusable blocks to ease the overall process of developing DApps and smart contracts. In the following segments, we discuss some of RSK’s contributions to DeFi, apart from including Bitcoin in the scene.
RIF on Chain (RoC) & Money on Chain (MoC)
Developed in collaboration with RIFOS and Money on Chain (MoC), RIF on Chain (ROC) is RSK’s very own DeFi ecosystem, complete with payment channels and naming protocols. At this point, let us take a brief look at ROC’s main elements, namely the three interrelated crypto-assets: RIF Dollar (RDOC), RIFpro (RIFP) and RIFX.
RDOC is the crypto-collateralized stablecoin of the RoC ecosystem, which acts as a store of value and fuels the sharing economy on RSK. Unlike ordinary stablecoins, RDOC is audited and backed by smart contracts instead of fiat bonds.
RIFP facilitates the issuance of RDOC and inherits its volatility. It also acts as a bridge between the three ROC elements. On the other hand, users can stake their RIFP tokens to issue RIFX, which is a variably-leveraged long asset. RIFX inherits the volatility of RIFP, while distributing the trading fee generated from its sale among the network’s RIFP users.
As a whole, ROC has a detailed and complex procedure for tackling the volatility of the assets, as well as for determining their current value within the ecosystem. In this article, we don’t dive into the depths of ROC, but urge the interested reader to watch our webinar on this subject.
RSK Swap
RSK Swap is RSK’s native decentralized exchange, that adopts Automated Market Making (AMM) to determine asset prices. As a fork of the Uniswap v2 protocol, RSK Swap enables liquidity providers to earn a passive income by staking their assets, and in doing so, addresses the persistent liquidity concerns facing the DeFi sector.
By being decentralized, permissionless, secure, and censorship-resistant, RSK Swap ticks all the boxes that DeFi solutions intend to achieve. The swapping protocol functions with a distinct “pool token”, which users can generate by locking their ERC20 to a specific staking wallet.
Some Other RSK-Based DeFi Solutions
ROC and RSK Swap are two of the most prominent DeFi offerings on the RSK network, but there are several others as well. SOVRYN is a decentralized Bitcoin trading and lending platform, which enables its users to earn while they HODL.
Interoperable with new or existing exchange protocols, SOVRYN features spot-exchange, margin trading, lending pools, SmartBTC relay, and bitcoin-collateralized stablecoins. Apart from being a bitcoin-native platform, it is also non-custodial, meaning that the user retains their private key. Moreover, users gain substantially from the low costs, minimal slippage, AMM-based trading, competitive interests and returns for HODLers, and so on.
Defiant is yet another RSK-based DeFi solution. It is a first-of-its-kind non-custodial mobile application that combines a crypto wallet with an in-built P2P marketplace. Apart from being primarily stablecoin-oriented, Defiant uses geolocation and enables its users to discover counterparties based on physical proximity. The app is inherently interoperable, in the sense that it involves tokens from Bitcoin, RSK, and Ethereum.
Recently, MOC has released yet another DeFi offering on the RSK network—a layer-2, decentralized exchange named TEX. The platform features a unique trading mechanism, a decentralized order book, limit orders, and market maker orders. Moreover, it leverages oracles to ensure a fair pricing mechanism for listed assets, alongside upholding the user’s sovereignty.
Conclusion
Backed by the promise of an unprecedented financial paradigm and as a solution to the fundamentally persistent problems of traditional financial systems, DeFi has been in the spotlight for almost half-a-decade now.
Leveraging blockchain, cryptography, and P2P technologies, DeFi eliminates the multiple intermediaries that plague the centralized financial framework, primarily by using smart contracts and atomic swaps, among other elements. In turn, this ensures greater autonomy and control for end-users, while also safeguarding their privacy. In the absence of centralized authorities, DeFi ecosystems are permissionless and censorship resistant. Furthermore, they perform the much-needed function of extending financial services to the global unbanked population that traditional finance often excludes.
Realizing the need for financial inclusion and user-oriented systems, RSK has been a significant contributor to the ongoing DeFi movement. Considering the central role that money and monetary systems play in our lives, it is extremely important that the future is more egalitarian and just in these regards. RSK, for one, strives to strengthen the foundation of the future that it envisions.