Defi turns aside the incongruities of P2P lending and crowdfunding

Defi turns aside the incongruities of P2P lending and crowdfunding

Which party you will cast your vote to that depends on various issues. The care of people depends on personal philosophy, freedom, and many other things. However there are two teams, Democrat and Republican that actually matters. But hypocrisy is inherent to human nature indeed. This is the fact that we think of peer-to-peer economics, but we are surrounded by centralized systems like banking system.

Peer to peerless

When you eye over the history of Napster, Kazaa, and BitTorrent, with their brick-through-the-window of the media industry, you will get lose your confidence over the future of peer-to-peer economies to some degrees. They aimed at building digital rights management into music players, song files, and any teenager onto whom they could tattoo the letter of the law. But who would be paying consumers in the market in the first place was a question indeed.

Did you think of the reason for the collapse of DRM-free downloads? It is because of their commercial thoughts. With the help of the internet, the media industry is delivering user experience but they need to walk under several laws. Do you think peer-to-peer alternatives have a value proposition? It’s no because it losses it already. You will hardly find good data on YouTube as a facilitator of copyright breach. Other websites are also running for monetization with media content. And one can access YouTube for free indeed. But a proxy for this content is the take-down requests under the DMCA. It is called file-sharing not peer-to-peer.

Peerless Lending

People around the world who need to borrow are showed up with various credit risks that they need to assess. Fintech credit has come up intending to recreate the dynamics of the sharing and social media revolutions. They are just cutting off the intermediary unlikely to the centralized system. All the DeFi protocols are redefining market structure.

Digital asset fundraising platforms are going through hard time because on the off chance you are a venue for emerging credit, the risks that come to your platform are prone to hostile selection and the lemon problems, which refer to the issues that arise regarding the value of an investment because of asymmetric information possessed by the buyer and the seller. Another problem is that these platforms are not having sufficient investors.

Peer-to-peer lending was never going to work without centralizing function to standardize deposits and cut up the risks. There are a small number of people who want to go for peer-to-peer lending. Many digital lender platforms have gone bellied up and only some outlived. It is because a large part of p2p lending platforms involved fraud and bankruptcy.

Crowdless funding

As we know, neobank players like Monzo and Tandem involved with the crowdfunding market intending to raise single-digit million amounts from thousands of excited supporters. The crowdfunding was proved to be successful and run for a long time because of the positive relationship between investors and users. For becoming the next generation of investment banking, the platforms had to do the heavy lifting to impact regulation.

From that we can have some takeaways. In case of crowd funding, you have to make the market 1,000 times larger and this is the reason why crypto market prints large numbers. It is because there is demand anywhere in the world. Another thing is that the adverse selection problems remain in the asset class. The last one to mention is that the incentive alignment between people who crowdfunded the neobanks and then became users of those applications is rooted.

Over the last two years, Initial coin offering became able to raise $20 billion. This is the revolution that crypto protocols are bringing about. It is really a mystifying issue. The financial industry hasn’t been yet able to deploy a business model for delivering a better user experience through internet.

Crowdfunding can be applied when there is something to obtain by participation. These markets are troublesome when considering the community aspects which are far stronger than in the crowdfunding model, and viral coefficients are higher indeed.


Peer-to-peer models have spread its fringe in media, digital monopolies ruling the law. P2P lending protocol has been brought to light as a more straightforward and scalable solution. The market is slowly going ahead while considering p2p crowdfunding. In the space of crypto, there is reign of Morgan Stanley, JP Morgan, Bank of America, and Goldman Sache and selecting among them is like choosing between Democrats and Republicans. So positioning mutually owned protocols as market venues like Uniswap can be the right thing to do in blockchain experiment.

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