“The greatest risk is in not looking, not seeking to understand” — Christine Lagarde

Our banking and financial networks of today are simply communication networks for settling financial transactions, they guarantee that transactions will be processed, executed, and settled. Banks are responsible for interfacing with these networks on behalf of their clients — sending the right messages and responding appropriately to messages received. The internet brought us, as users of banks, that much closer to their messaging network, allowing for online banking and fast mobile payments all whilst hundreds of bank branches closed across the globe.

Additionally, we have seen the rise of countless fintech companies over the past decade. These companies built on the edges of traditional banking, naturally expanding the capabilities of the banking industry itself. They began servicing niches that banks historically either didn’t want to or couldn’t.

Ethereum isn’t just another piece of fintech. It is a platform for open and permissionless innovation of financial services. Banks are closed, walled gardens of financial innovation. They have robust frameworks and processes for choosing which projects to pursue. But they are quickly running out of time.

While banks and their directors sit in bureaucratic meetings that last from weeks to months making decisions on their next moves, the Ethereum network is experiencing an explosion in decentralized financial applications. A no rules, open field of innovation is going on right now in the financial services sector.

How does the Ethereum network make this possible?

At its most basic Ethereum is a new financial network, it has additional expressiveness to other networks like Bitcoin in that it can provide guarantees over basic conditional agreements. If this, then that. When this, then that. These are known as smart contracts.

Smart contracts can be used to create trust-minimised services. Where users of the service can interact peer to peer without requiring a third-party intermediary to enforce and manufacture trust. Ethereum is essentially a vending machine for the creation, management and settlement of trust-minimised financial services that replace the need for intermediaries in financial transactions.

You see, Ethereum isn’t just making banking better, it’s removing the need for banks in their entirety. Instead of employing banks to send and receive messages for you, you can now directly interact with a financial network.

There is obviously an ugly side to open innovation, the hype, volatility and speculation are often cited by critics as reasons for its likely failure. Generalising the bad behaviour of a few whilst discrediting the rest is going to become an expensive mistake for any banks trying to remain relevant in the digital age.

What is possible on the Ethereum network today?

I can hold money on wallets like Metamask and Argent. I can lend and borrow money on protocols like Compound and Aave. I can exchange assets and provide liquidity to exchanges like Uniswap. I can use hedge fund like tools and invest in tokenised investment strategies on Set Protocol. I can insure my smart contract risks with Nexus Mutual. I can spend money on websites like Bidali. I can trade derivatives on platforms like Synthetix. I could even make predictions on future outcomes of events like the 2020 presidential election on Augur.

Imagine what will be possible in the next 10 years? This rapid cycle of build, assess and iterate is an unstoppable force guiding us on a journey to a low-cost, inclusive financial future.

The story in numbers (Correct as of 20 September 2020)

Since the beginning of 2020 we have witnessed increases across all metrics we can consider measures of success for Ethereum.

Daily active users grew by 69% to 314 000.

Daily transaction count is up 87% to 1 019 533.

Unique decentralised finance (DeFi) users have exploded by 1050% to around 457 012.

Decentralised exchange volumes are now comparable with a small emerging market increasing by 3169% to a value of over $20 billion in just the last 30 days alone.

The dollar value of ETH locked in smart contracts that power financial services such as lending, borrowing and exchange has increased by 1169,27% to a total of $8,5 billion.

Data sources: State of the Dapps, DeFi Pulse, Dune Analytics