Decentralised Finance (DeFi) is an ecosystem of blockchain-based financial applications that operate without the intermediation of centralised entities such as banks or financial institutions. Using smart contracts, i.e. self-executing protocols on blockchain, DeFi enables financial transactions such as lending, trading, staking and cryptocurrency exchanges in a transparent and secure manner.
DeFi platforms exploit decentralised exchange (DEX) technology, where transactions take place directly between users, eliminating intermediaries and lowering management costs. For example, with platforms such as Uniswap or Compound, users can lend or borrow cryptocurrencies and earn interest without the need for traditional banks.
The key element of DeFi is autonomy: users retain total control over their funds and transactions, facilitating access to financial services globally, without geographic or economic discrimination.
The role of Smart Contracts
Smart contracts are a fundamental element of Decentralised Finance (DeFi). They are self-executing protocols that operate on blockchain and automatically execute instructions written in code when certain conditions are met. Thanks to this automation, smart contracts eliminate the need for intermediaries, ensuring transparency and security in transactions.
Smart contracts offer advantages not only in terms of efficiency, but also in terms of reduced costs, as they eliminate commissions and fees associated with traditional financial intermediaries.
DeFi and Alternative Finance
Minibonds and equity crowdfunding can interface with Decentralised Finance (DeFi) in several ways, offering new opportunities for capital access and investment through decentralised blockchain-based technologies. Here is how.
1. Tokenisation of Minibonds
Minibonds, which are debt instruments issued by small and medium-sized enterprises to raise capital, can be tokenized via blockchain platforms. Tokenisation allows these traditional instruments to be transformed into digital assets in the form of tokens, which can be traded on DeFi or Decentralised Exchange (DEX) platforms. This process increases the liquidity of the minibond market, making them more accessible to a global and decentralised audience. Furthermore, minibond tokens can be traded in real time, eliminating intermediaries and reducing transaction costs.
2. Equity Crowdfunding on DeFi Platforms
Equity crowdfunding, a method through which start-ups and SMEs raise capital by issuing shares, can be brought to DeFi platforms through the tokenisation of shares. Tokens representing shares issued through equity crowdfunding can be distributed and traded on blockchain, providing greater transparency and liquidity than traditional models. The possibility of investing through dedicated platforms allows investors to participate in innovative projects and diversify their portfolio without the need for centralised intermediaries.
3. Hybrid Financing and Smart Contracts
Minibonds and equity crowdfunding can be integrated with smart contracts on DeFi platforms, automating processes such as the management of interest on minibonds or the distribution of dividends to investors in the case of equity crowdfunding. This can improve efficiency, reduce waiting times and ensure that all transactions are traceable and transparent.
4. Liquidity and Lending Pool
Companies can use DeFi to access pools of liquidity created through the proceeds raised from minibonds or equity crowdfunding. For instance, companies issuing minibonds could deposit the proceeds on DeFi platforms to generate passive returns through activities such as yield farming or staking, further increasing liquidity and revenue opportunities for investors.
This integration between traditional financial instruments and DeFi can represent a significant change for SMEs' access to capital, opening new avenues for financial innovation.
Italian and international market expansion
The global DeFi market is continuously expanding. Decentralised exchange platforms (DEX) and liquidity protocols allow companies to access liquid markets without traditional intermediaries, offering direct control over their assets. The volume of transactions on these platforms is growing rapidly, driven by demand for more autonomous and secure solutions than traditional financial channels.
The Decentralised Finance (DeFi) market has experienced explosive growth globally, with particular relevance in countries such as the US, the UK and Europe, while Italy is approaching these developments more gradually. Globally, the market value of DeFi increased from USD 21.21 billion in 2023 to an estimated USD 30.17 billion in 2024, with an annual growth rate of 42.2%.
The US dominates the DeFi market, thanks to a strong concentration of start-ups and investment capital in the technology and blockchain sector. Platforms such as Compound and Aave are among the leaders in decentralised lending. In Europe, the most active nations include Switzerland, the UK and Germany, with growing interest in regulating the DeFi sector to integrate them into the mainstream financial system. The UK, in particular, has a vibrant fintech and DeFi innovation scene, while Switzerland is at the forefront of developing legal frameworks for blockchain-based activities. Looking ahead, forecasts indicate that the DeFi market could reach a global value of $123.61 billion by 2028, thanks to the implementation of scaling solutions, institutional participation and the development of more accessible interfaces for users
Italy is still at an early stage of DeFi adoption, with a growing number of SMEs and startups exploring the use of blockchain for asset tokenization and access to capital via decentralised platforms. According to the Politecnico di Milano, Italy had 329 active blockchain projects in 2023. This figure represents significant growth compared to previous years, with increased interest from Italian companies and institutions in blockchain technology and its applications, including the areas of Decentralised Finance (DeFi), Internet of Things (IoT) and supply chain management.
The report by the Blockchain & Distributed Ledger Observatory of the Politecnico di Milano also highlights how the growth of blockchain adoption in Italy is mainly driven by small and medium-sized enterprises (SMEs) and the financial sector.
Sources:
https://www.futuredatastats.com/decentralized-finance-defi-applications-market
https://www.coingecko.com/research/publications/defi-categories-market-share