In today’s “Crypto for Advisors” newsletter, Jennifer Rosenthal of the DeFi Education Fund discusses decentralized finance and surveys investors in the space.
Then, in “Ask an Expert,” Sam Boboev of Fintech Wrap Up provides insight into the trends he is seeing with DeFi and AI.
– Sara Morton
Demystifying DeFi
As we mark another Bitcoin anniversary, it’s worth pausing to reflect on how far the cryptocurrency industry has evolved and what it may mean for financial professionals exploring the digital asset class for the first time.
A new national study from the DeFi Education Foundation, conducted by Ipsos on KnowledgePanel and supplemented by in-depth interviews in the Bronx and Queens, New York, shows that approximately 1 in 5 Americans (18 percent) report having owned or used cryptocurrency at some point in their lives. Our research also found that there is a diverse demographic base of Americans who have owned or used cryptocurrency over the past 12 months, including approximately a quarter of American Millennials (ages 30 to 44); 1 in 5 Americans who identify 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 financial application software system that allows people to have full control over their online financial transactions: people make all the decisions and maintain control over their digital assets at all times, without any middlemen or intermediaries like credit card companies. This is made possible by a technological innovation called “permissionless blockchains.” A blockchain is a decentralized digital ledger that securely records and verifies transactions over 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 trading cryptocurrencies, 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 don’t fully understand how the Internet is coded, but appreciate that there is an entire online economy that can be invested in (e.g. tech stocks). Likewise, many will not need to understand how DeFi works, but may be interested in exploring the tools and applications it can be invested in.
Interestingly, Ipsos research shows us that even if 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 Americans agree that we should “have a way to digitally send money to people without third-party involvement.”
Respondents also express deep frustration with the traditional financial system (less than half of Americans feel the current financial system meets their needs), and as technology continues to evolve, one can imagine that consumers and investors will look for reliable alternatives in financial services. Relatedly, 42 percent said they would likely try DeFi if the proposed legislation was passed and would use it to make purchases, pay bills, and save money.
Financial professionals have a unique opportunity to guide clients in learning about and gaining exposure to DeFi as a timely investment theme. With DeFi adoption still in this early phase, in addition to the recently launched suite of digital asset ETPs that provide familiar, regulated exposure to DeFi assets, financial professionals who can provide their clients with clarity, credible research, and free resources on cryptocurrencies and their sectors, such as DeFi, will be in a strong position to win over the next generation of investors.
Americans are increasingly curious about the possibilities that emerging technologies and investments can unlock, and financial professionals are well positioned to help clients build portfolios that are ready for the future. New “Demystifying DeFi” research provides timely and methodologically sound third-party data that can help make customer conversations more concrete and actionable.
For more information, you can download the full research report here.
– Jennifer Rosenthal, Director of Communications, DeFi Education Fund
ask an expert
Q. What key trend will shape the next phase of DeFi growth?
The biggest driver of the next phase of DeFi is the tokenization of real-world assets (RWA). According to a16z’s State of Crypto 2025, US Treasury on-chain tokenization grew more than 700 percent year over year, reaching a locked value of $1.2 billion. Institutions are finally getting into DeFi, not for speculation, but for performance and efficiency. As stablecoin volumes surpass $9 trillion annually, tokenized assets are becoming the new backbone of collateral. The next frontier is regulated DeFi, where permissioned pools and KYC-enabled protocols merge institutional trust with the liquidity and transparency of DeFi.
Q. How does AI influence DeFi innovation?
AI is reshaping DeFi by bringing autonomous decision-making to finance. Gartner estimates that by 2030, AI agents will make or influence $30 trillion worth of purchases. Intelligent agents now rebalance liquidity pools, manage collateral ratios, and forecast market changes in real time. This convergence of AI and DeFi is paving the way for self-optimizing financial ecosystems, where AI agents operate treasuries, execute trades, and even design new financial products dynamically.
– Sam Boboev, founder of Fintech Wrap Up
Keep reading
- JPMorgan CEO Jamie Dimon now acknowledges that cryptocurrencies and stablecoins are “real” and here to stay.
- Mastercard is in talks to acquire crypto payments rail company Zero Hash with a rumored price tag of $2 billion.
- BlackRock’s Larry Fink says “we’re not talking about it enough. Most countries are not prepared for what’s coming” regarding tokenization and digitization of assets and currencies.
