While decentralized finance was born following the last recession, the current economic downturn seems set to result in big gains for DeFi.

Where Bitcoin moved currency beyond centralized control, DeFi – decentralized finance – aims to do the same for financial tools like banking, lending, borrowing and investing. Based on a blockchain platform, DeFi makes it possible to securely create, issue and exchange digital assets, with no need for accounts, and no need to be approved. Recently these assets have taken the form of stablecoins – cryptocurrencies whose value is pegged to the value of gold or a fiat currency such as US dollars – and this has helped raise interest in DeFi.

While COVID-19 has led to a worldwide recession, its impact on businesses and consumers has been far from equal. Tech giants and many online businesses have surged ahead, for example, while airlines, hotels, restaurants and brick and mortar retailers have experienced continued losses due to restrictions on travel, ongoing lockdowns and reduced consumer activity. August 2020 saw corporate bankruptcies in the US reach a 10-year high. And at an individual level, nearly 30 million Americans are depending on unemployment insurance, and when eviction moratoriums run out at the end of September, approximately 1 in 5 renters in the US risks losing their home. Although it’s still too early to know for sure what the post-pandemic world will look like, there is little doubt about the impact it’s had on people.

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