Picture this, Meet Thabo, a smallholder farmer in rural Kenya. For years, he’s been shut out from the formal banking system. Institutions tag him as too “risky,” but that’s because they don’t understand the life he has to live. He wants a loan to purchase higher-quality seeds and irrigate his crops. This investment will give him the opportunity to escape the cycle of poverty. The local loan shark, the only game in town, charges suicide-level interest rates that sink him deeper. To many, this is the harsh reality of life for millions all over Africa. CeFi promised progress but delivered predatory practices.

Broken Promises, Broken Systems, Broken Lives

The failures of CeFi in Africa is not only an access issue. It’s a matter of trust. How can you have faith in a system that forces you to navigate an unachievable injury course maze? Talk about adding insult to injury with a last-minute denial! How can you have faith in the institutions that structured a system to put profit ahead of people, forcing the most vulnerable communities to turn to predatory lenders? The bankruptcies of Genesis, Celsius, BlockFi and Voyager should be ringing alarm bells loud enough to wake the dead. The whole CeFi house of cards is set to come tumbling down with victims always being the common folk.

DeFi offers an alternative. A transparent, permissionless alternative. Think of Aave, for example. It’s not Big Tech making these decisions in the shadows. It’s a decentralized protocol, regulated by open-source smart contracts, where any lending and borrowing happens on-chain in a transparent and publicly verifiable way. No more junk fees, no more wallet biopsy for looking with no intention to buy.

DeFi cannot be limited to finance, it must be about empowerment. It’s about providing people like Thabo with the resources they need to improve their financial lives. We’re building a more equitable, inclusive financial system. It’s time that this Caucus’s work ensured that this new system serves everybody — especially the historically privileged few. Indeed, it’s high time that Africa cease being a CeFi giants playground and begin developing its own financial destiny.

Sustainable Yield: The Real Game Changer

Let’s face it The first DeFi boom was built on hype that couldn’t be maintained. Yield farming schemes shone bright but burned out, as they were always fated to do. For the new crypto generation, DeFi lending is taking center stage as the only true sustainable method of generating yield within the crypto space. Forget the days of hunting temporary APYs on DEXs, always fighting impermanent loss.

  • DeFi Lending TVL: $53.6 Billion (43% of total DeFi TVL)
  • DEX TVL (peak): $85.3 Billion (Nov 2021)
  • DEX TVL (current): $21.5 Billion

The numbers speak for themselves. We’re seeing traders leave the volatility of DEXs and move into the relative stability of DeFi lending. By providing ETH and USDT on Aave, you can earn on stable APYs. This marks an encouraging departure from the hit-or-miss rewards and punishments typically found on DEXs. This regulatory stability allows them to continue constructing their sustainable financial ecosystem across Africa. Americans should be able to expect stable returns, not have to bet their savings.

Uniswap V3 broke the mold. Its capital efficiency is a double-edged sword. It could be awesome for sophisticated traders but makes things even more complicated for the everyday user. Unlike the typical DeFi lending legalese, almost everything here is simple and easy to follow. Lend your assets, earn interest. Borrow against your collateral, access capital. Simple.

Building Africa's Financial Future, Block by Block

DeFi lending isn't a silver bullet. It’s not going to solve all of Africa’s financial problems overnight. This is an enormous opportunity to use our collective power to build an inclusive and equitable financial system. Most importantly, though, it empowers everyday people and communities to seize control of their own economic destinies.

Consider this: by the end of 2024, DeFi-based crypto lending accounted for approximately 65% of the total market, consistently increasing its market share since Q4 2022. This is more than a trend, it’s a fundamental revolution in how consumers are accessing and managing their money.

Explore DeFi lending platforms. Find out how it works and how your community can benefit. Promote regulatory policies that encourage development of the DeFi ecosystem in Africa. Follow the money. Fund projects that are creating real-world solutions to using DeFi. Discuss it at home, with friends and in your community.

Imagine a world where Thabo can readily obtain low-cost credit. This support allows him to make improvements to his farm, doubling and tripling his income potential. Picture that future, where millions of Africans have far greater agency over their financial futures. Only then can they truly escape the empty pledges of CeFi’s predatory space. That future is within our reach. Let’s not waste this chance and make it happen together, piece by piece.