In today’s “Crypto for Advisors” newsletter, Jennifer Rosenthal of the DeFi Education Fund breaks down decentralized finance and surveys investors in the space.
Then Sam Boboev of Fintech Wrap Up provides insight into the trends he sees with DeFi and AI in “Ask an Expert”.
–Sarah Morton
Demystifying DeFi
As we mark another anniversary of Bitcoin, it’s worth pausing to reflect on how far the cryptocurrency industry has come and what this could mean for financial professionals exploring the digital asset class for the first time.
A new national survey by the DeFi Education Foundation, conducted by Ipsos on KnowledgePanel and supplemented with in-depth interviews in the Bronx and Queens, New York, shows that about 1 in 5 Americans (18 percent) report having owned or used crypto at some point in their lifetime. Our research also found that there is a diverse demographic base of Americans who have owned or used crypto in the past 12 months, including about a quarter of American Millennials (30- to 44-year-olds); 1 in 5 Americans who identified as black, non-Hispanic; 1 in 5 of all American men; and 1 in 6 Americans who have a bachelor’s degree or higher.
By contrast, only 3 percent of Americans have heard of “decentralized finance,” or DeFi, for short.
So what is DeFi?
Decentralized Finance (DeFi) is a software system of financial applications that enables individuals to have full control over their financial transactions online: individuals make all decisions and retain control of their digital assets at all times without intermediaries or intermediaries such as credit card companies. This is possible because of a technological innovation called “permissionless blockchains.” A blockchain is a decentralized digital ledger that securely records and verifies transactions across a network of computers without a central authority. Many believe that Bitcoin is the first example of a decentralized financial asset. Other DeFi assets include Uniswap, a DeFi exchange for crypto trading, and Aave, a DeFi tool for lending and borrowing digital assets. It may be helpful to think of DeFi as a ‘sector’ of the crypto universe.
Most people don’t fully understand how the internet is coded, but do understand that there is an entire online economy that can be invested (eg tech stocks). Similarly, many do not need to understand how DeFi works, but they may be interested in exploring the tools and applications that can be invested on it.
Interestingly, the Ipsos research shows us that while Americans are not specifically familiar with the term “decentralized finance,” they are interested in the potential that DeFi technology and innovations can unlock. For example, more than half of all Americans agree that we need to “have a way to send money digitally to people without any third party involved.”
Survey respondents also express deep frustration with the traditional financial system (fewer than half of Americans feel the current financial system meets their needs), and as technology continues to advance, it is conceivable that consumers and investors will seek reliable alternatives in financial services. Similarly, 42 percent said they would likely try DeFi if the proposed legislation passes and would use it to make purchases, pay bills and save money.
Financial professionals have a unique opportunity to lead clients in learning about and gaining exposure to DeFi as a timely investment theme. With DeFi adoption still in this early stage – plus the recently launched suite of digital asset ETPs that provide well-known, regulated exposures to DeFi assets – those financial professionals who can provide their clients with clarity, credible research and free resources about crypto and its sectors, like DeFi, will be in a strong position to win over the next generation of investors.
Americans are increasingly curious about the possibilities that new technologies and investments can unlock, and financial professionals are well positioned to help clients construct portfolios that are ready for the future. The new “Demystifying DeFi” research provides timely, methodologically sound third-party data that can help make client conversations more concrete and actionable.
For further reading, you can download the full research report here.
– Jennifer Rosenthal, Communications Manager, DeFi Education Fund
Ask an expert
Q. What key trend will shape the next phase of DeFi growth?
The biggest driver behind DeFi’s next phase is the tokenization of real assets (RWAs). According to a16z’s State of Crypto 2025, on-chain US Treasury tokenization grew over 700 percent year-over-year, reaching $1.2 billion in value locked. Institutions are finally getting into DeFi – not for speculation, but for profit and efficiency. As stablecoin volume exceeded $9 trillion annually, tokenized assets are becoming the new security staple. The next frontier is regulated DeFi, where permissioned pools and KYC-enabled protocols marry institutional trust with DeFi’s liquidity and transparency.
Q. How is artificial intelligence impacting DeFi innovation?
AI is reshaping DeFi by bringing autonomous decision-making to finance. Gartner estimates that by 2030, $30 trillion worth of purchases will be made or influenced by AI agents. Smart agents now rebalance liquidity pools, manage security ratios and predict market shifts in real time. This convergence of AI and DeFi paves the way for self-optimizing financial ecosystems – where AI agents run treasuries, execute trades and even dynamically design new financial products.
– Sam Boboev, Founder, Fintech Wrap Up
Continue reading
- JPMorgan CEO Jamie Dimon now acknowledges that crypto and stablecoins are “real” and here to stay.
- Mastercard is in talks to acquire crypto payment rail company Zero Hash for a rumored $2 billion price tag.
- BlackRock’s Larry Fink says “we don’t talk about it enough. Most countries are not ready for what’s coming” in terms of tokenization and digitization of assets and currencies.
