In recent years, decentralized finance – better known as DeFi – has emerged as one of the most disruptive innovations in the global financial landscape.
Since 2018, this technology is often described as a system capable of dismantling the traditional structure of financial services, replacing it with a modular model, similar to a set of Lego bricks.
However, according to Arjun Sethi, co-CEO of Kraken and special guest in the latest episode of Fortune’s Crypto Playbook vodcast, this vision risks being reductive.
The Unification of Finance Through Decentralization
Sethi highlights how, although the dominant narrative presents DeFi as a fragmented alternative compared to traditional systems, in reality, DeFi unifies numerous elements of finance.
Historically, banks have built true “walled gardens” of financial services: from asset custody to sales and lending, everything happens within a closed ecosystem, often managed by selected partners. In this scenario, the end customer has little or no say in who manages the transactions behind the scenes.
With the advent of DeFi, this paradigm changes radically. The technology is based on open protocols that allow users to choose who manages their assets and how.
These protocols, while being decentralized, work in an integrated manner, offering unprecedented synergy between different financial instruments.
According to Sethi, “what you can achieve is defragmenting what you own in various traditional financial markets.” An aspect that is often overlooked when discussing decentralized finance.
The Accessibility of DeFi: From the Privilege of a Few to the Experience of All
The Simplification of User Experience
Despite the enormous potential offered by DeFi, until recently access to these tools was reserved for a niche of expert users, due to the complexity of the interfaces and processes. However, this barrier is beginning to crumble.
Companies like Kraken are developing intuitive interfaces that allow even less experienced users to use DeFi in a manner similar to a traditional bank or brokerage platform.
The xStocks Case: Tokenization and Global Access
A concrete example of this evolution is represented by xStocks, one of the latest offerings from Kraken. These are tokenized shares of major companies like Apple or Tesla.
According to Sethi, xStocks has already achieved enormous success in markets like South Africa and Argentina, thanks to the ability to purchase shares without the additional costs imposed by intermediaries. In these countries, fees can inflate the price of shares by 10-15% compared to the real value.
The revolutionary aspect of xStocks is that, thanks to the DeFi component, tokenized stocks can be bought and sold not only on Kraken, but on any platform that adopts the appropriate protocols.
This is a radical change compared to traditional brokers, where trading is tied to the ecosystem of the individual operator.
Currently, xStocks is available in numerous international markets and in Europe, with the launch in the United States scheduled for early next year.
At the moment, Kraken offers the possibility to purchase tokenized shares of about 50 companies, but Sethi announced that the number will soon rise to 100 and, subsequently, to 1000 of the most popular stocks.
The Future of DeFi According to Kraken
The Technology Behind Tokenization
During the interview given at Fortune’s Brainstorm Finance in Park City, Utah, Sethi also explained the technological mechanisms that make asset tokenization possible. This process allows a real asset – like a stock – to be digitally represented in the form of a token, making it tradable on decentralized platforms.
Expansion Prospects
Looking to the future, Sethi foresees a rapid expansion of DeFi. The goal is to further lower the barriers to entry, making decentralized finance increasingly accessible and integrated into the daily lives of users worldwide.
The innovations advanced by Kraken represent just the beginning of a transformation that promises to redefine the very concept of financial services.
DeFi: A New Way of Thinking About Finance
Ultimately, DeFi is not just offering an alternative to traditional systems, but proposing a new model of unification and openness.
Thanks to transparent and interoperable protocols, users can finally have control over their assets and management methods, overcoming the limits imposed by banks and intermediaries.
Initiatives like Kraken’s xStocks demonstrate that this revolution is already underway and set to involve an increasing number of people and markets.
Decentralized finance is thus poised to become the new standard, capable of combining accessibility, transparency, and freedom of choice.
A change that, according to Arjun Sethi, is only at the beginning, but promises to forever redefine the relationship between individuals and financial services.