Decentralization, Decentralized Finance (DeFi) and DeFi in Africa

  •  over $1 Billion has been locked in DeFi Ecosystem
  •  Maker has the most revenue locked amongst DeFi protocols and applications. 
  • Uniswap DEXes has over $59.1 million locked, makes it the top DEX in terms of revenue locked in DeFi
  • Top three lenders in the DeFi ecosystem are Maker DAO, Synthetix and Compound



Imagine a financial market that is not controlled by the government or financial organizations? This is the possibility that Decentralized Finance (DeFi) brings. A financial market not controlled by governments and other centralized organizations.
Central authorities and organizations issue the FIAT currency that drives our economy and these currencies are used for every trade. The government and banks due to this possess the power to manage and regulate the flow and supply of such currencies in the market, and as a result controls our financial structures.
We also handover control of our assets to various financial organizations like banks in expectations of getting higher returns. The problem with the centralized finance structure is since all control and fund is centralized, the risk is you don’t have total control over your assets at the end of the day.
The main idea of crypto is decentralization, that is taking control away from the center. This can be traced to bitcoin, ethereum and other crypto coins offering a way to trade securely peer-to-peer without need for intermediaries like a bank.
This gives their users complete control over their assets. While this idea of decentralization of finance created cryptocurrencies and blockchain, there are a couple of limitation within the industry stopping the complete decentralization of cryptocurrencies and decentralized financial ecosystem:

  •  While the concept of crypto is decentralization, they can mostly be accessed through centralized access points such as centralized exchanges. Recently due to the enactment of AMLD5 in Europe. Crypto Exchanges in Europe have been mandated to close accounts of its users that haven’t completed their KYC processes. This further kills the idea of cryptocurrency being decentralized and not controlled by central governments or organizations.


  •  Another issue that further limits the idea of decentralization of crypto is government and regulatory bodies interference with regulating cryptocurrencies. Crypto wasn’t created to be controlled by centralized bodies, majority of these crypto exchanges due to government regulations limit the amounts of funds their users can withdraw daily this means as a user you do not have total control of your assets.


What is DeFi?

DeFi stands for Decentralized Finance. It is simply a transformation of our traditional centralized financial market and structures into a decentralized financial ecosystem where no government or organization has total control over.
DeFi is simply offering you total control over your assets as against the centralized financial structures. Through the integration of Blockchain technology into our financial ecosystem you can have total control of your assets.
Think of DeFi as a completely open financial ecosystem where you can build various small financial tools and services you can use daily in a decentralized manner. Imagine having access to loans, trading, saving, sending & receiving money, paying bills in a decentralized way?

DeFi in Africa

The Decentralized Financial Ecosystem in Africa has been developing steadily with new products and brands entering the space. But I would love to admit that a majority of DeFi products in Africa we think are decentralized are not actually decentralized but centralized due to control still coming from the center.
Blockchain brands in Africa have made giant strides at not just being able to buy or sell cryptocurrencies but being able to spend these cryptocurrencies in our daily activities like paying bills, shopping, withdrawing at ATMs, etc.
Let’s take a look at some so called DeFi protocols and applications in Africa:


anyone in the crypto space in Africa should have heard or probably used Luno. Luno have been here for a while and they are veterans in the space. They provide services such as being able to buy cryptocurrencies through bank deposits and transfers. Luno most importantly provides crypto users in Africa with the opportunity of being able to convert cryptocurrencies like bitcoin, ethereum and bitcoin cash to real money and being able to withdraw to your bank accounts.
Luno being a crypto brand utilizing the blockchain technology which champions the course of decentralization still operates a centralized pattern of finance. Where the total control still comes from the center. There are withdrawal limits, KYC verification and cryptocurrency wallets where you do not hold the private keys on Luno. These three features listed clearly deprives Luno of the Decentralized Finance (DeFi) tag just like Coinbase in the United States of America.

First Kudi

The First Kudi Brand have done tremendously well in the blockchain space in West Africa being the first blockchain brand to issue a verve debit card, one click bank accounts, Point of Sale App, etc. But despite these innovative products and services provided they still fall below the decentralized finance (DeFi) standards. For instance, in order to get the verve debit card you still need to complete a verification process which involves providing your personal data in order to verify your identity. This is the exact same procedure you go through in the bank to get a debit card.
Also the idea of First Kudi being a Blockchain brand to partner with a bank in creating bank accounts for its users further centralize the idea of blockchain technology thereby depriving its users of decentralization. All your assets and data at the end of the day is controlled by the center.


Bitfxt offers its users an opportunity to convert their cryptocurrencies to FIAT money and being able to pay bills with it. This is very innovative as it can be but knowing that you have to go through a verification process where you provide your data in order to access this service, totally kills the idea of decentralization. Bitfxt also offers a debit card like First Kudi but you need to complete a verification process in order to obtain this card too.
One of the main product of Bitfxt is a centralized exchange, we all know centralized exchanges use a central wallet where you do not hold the private keys to such wallets. What this means is you do not have total control over assets and in cases of hacks you may end up losing your funds. Recently an Italian exchange called Altsbit was hacked of over $70,000 in cryptocurrencies.


Terra is a South African Blockchain start-up. Their products include a centralized crypto exchange, a coin (credit), Minipos, Tellus-Pay, Terra-Mart, etc. Terra has done well to build a complete blockchain financial ecosystem which houses its own blockchain. But as a common problem of mixing centralization with blockchain. The Terra blockchain is not devoid of centralization, like for example their crypto exchange TerraCex is a centralized crypto exchange.
Outside this they offer one of the easiest decentralized way of getting returns on investment through staking your credit coin in the Minipos wallet with guaranteed returns of up to 100% in a calendar year. Minipos wallets for me is one of the top DeFi products in the Blockchain space in Africa.
But I would recommend they explore the opportunity of developing a decentralized exchange (DEX) and closing their centralized exchange (TerraCex). This will position them as a top provider of Decentralized Finance (DeFi) services in Africa.

AfroDex Labs

AfroDex Labs have positioned themselves as leaders in the Decentralized Finance (DeFi) Industry in Africa by being the first to own and develop a decentralized cryptocurrency exchange. Decentralized Crypto Exchanges provides their users an opportunity to trade directly peer-to-peer without an intermediary.
These type of exchanges gives its users total control over their assets and provides the highest level of security and data encryption. By providing a decentralized way of trading cryptocurrencies, AfroDex Labs are a provider of Decentralized Finance (DeFi) services in Africa.


Outside decentralized exchanges being a major product of DeFi, stablecoins are another very important product of the Decentralized Financial ecosystem. Stablecoins are cryptocurrencies that are backed by or collateralized with physical assets such as FIAT money and gold. NairaX is a stablecoin that is backed by the Nigerian Naira 1:1.
Due to high volatility in the value of cryptocurrencies, stablecoins provide an opportunity to hedge against inflation at times of volatility. NairaX as a stablecoin provides its users this opportunity.


Defi is a part of cryptocurrency that has been put on the searchlights recently, this is currently a booming industry. As the traditional financial institutions are exploring the possibility of adopting decentralized finance. But with the interests of financial institutions comes centrality, since they operate in a centralized manner. I believe all they plan to do is explore the idea of DeFi then utilize blockchain technology but still continue in a centralized manner.
This can be traced to governments and organizations bringing up enactments to regulate cryptocurrencies, an example is the AMLD5 laws in Europe. Also the scrutiny Facebook Libra stablecoin is currently facing from the government tells you even if finance is to go decentralized per say it can only be if the government and institutions have total control over it.
Also the issues raised in this article about some cryptocurrency brands in Africa that claim to offer DeFi services which aren’t really decentralized at the end of the day, shows you we need to overhaul the whole DeFi ecosystem and take control away from the center.
We have heard countries like China proposing a National cryptocurrency, as much as this is a step in the right direction towards cryptocurrency adoption but this also takes away the Decentralized idea of blockchain technology where no government controls it. Having a National cryptocurrency means at the end of the day the government still controls the financial structure but dubs it as being decentralized.
DeFi can only be decentralized if no government or organization controls or regulates how things are done.