With ETHDenver behind us, it is time to share with you all the first version of the report I have been working on during my Fellowship at the Ethereum Foundation that is exploring how we can unlock last-mile lending in Guatemala, whilst also driving a myriad of lessons for the wider crypto ecosystem through that process.

The intention of this first version is to receive feedback from stakeholders across the ecosystem to launch the second and final version of the report with the community’s feedback. Below you will find v1 of the report in read-only, if you would like to join as an editor of the report, you can get access to the comment-enabled document by:

1. Collecting this post (for free!)

collect://

2. Joining the “V1 Editooor” role in Guild here

3. Within Guild, heading over to the token-gated Google Doc (this document also includes the full reference list as well)

I’m incredibly excited by this launch, and look forward to getting your thoughts. With your feedback, I will go ahead and work on version two over the next few weeks and get it launched for you, alongside an upcoming podcast series with some amazing guests!

If you’d like to join us in Telegram, here’s the link to the community. To stay up to date with the latest research, you can subscribe to my Mirror blog here:

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Also, whilst at Denver, I gave a talk on the research I’ve been doing, sharing more on the Ethereum Foundation’s Fellowship program, and some of the high-level findings of the research:

https://youtu.be/P9z0GeENaOs

And now, without further ado, I present you v1 of the Next Billion report:

This report is a part of the Ethereum Foundation’s Fellowship program. The Fellowship program is a forum for leaders who are driven by leveraging Ethereum as a public good to help billions of people coordinate and thrive. The Fellowship program aims to support individuals who are passionate about identifying barriers to mass-adoption and breaking down the barriers for underrepresented communities to access crypto. This report is made possible thanks to the support of the Ethereum Foundation’s Next Billion Team, Lens Protocol, and the Celo Foundation.

I grew up in Guatemala, a beautiful country that is unfortunately plagued by corruption, inequality, and poor governance, among a number of other social and cultural failures of coordination. From a young age, I sought to understand the reasons as to how and why Guatemala, and much of the Central America region ended up where it did. That curiosity and intent to seek out solutions to these questions I had has led me down a colorful and multi-faceted exploration of what it might take for Guatemala, and countries like ours to develop, particularly considering the hyper-modern context within which we find ourselves today. Over the course of my journey, I’ve worked on developing healthcare initiatives alongside Nobel Laureates, studied programs for neuro-divergent youths in Europe and Asia, worked on the largest art project for charity, at the fastest-growing clean energy fintech firm, in community spaces aiming to provide a nurturing environment world changers, obtained a graduate degree in Environmental Governance from the University of Oxford, where I worked as a researcher study the intersection of finance and climate action, and of course have spent a number of years in the crypto ecosystem. My raison d'etre is ultimately grounded in creating the enabling environments that allow anyone to flourish in their own right. I believe that leveraging technological and cultural revolutions with the disenfranchised is the most effective way of unlocking abundant livelihoods for all.

With this conviction, one of the projects I’ve worked on is a low-income housing initiative called Lamina POP. Lamina POP’s mission is to provide access to affordable dignified housing. The patented construction technology that was developed by Lamina POP’s founder and dear friend, Pablo Swezey, who has since passed. With his advancement, we can build structurally sound buildings for 30% cheaper than leading low-cost solutions in a fraction of the time. Further, thanks to the fact that we construct with light-weight and commonly found materials, we can build these homes in even the most rural areas of Guatemala.

Lamina POP does not operate as a charity as we believe that by providing affordable alternatives that provide people with equitable financing, there is a much faster route to more people accessing these homes through a self-sustaining model. Of course, individuals or groups who wish to donate a home may do so, but it is not the primary model under which we operate. Our thesis is that by being able to provide access to dignified housing (alongside our partner’s offerings of clean water, energy efficient stoves, solar energy, among other benefits) for the community which we serve we can uplift families lives that lead to healthier and more sound environments. Our aim is to deliver more than just four walls, but rather spaces where people have clean water, energy, food production, and all of the necessities for self-sovereign development to take place.

One of the major challenges we have witnessed in scaling Lamina POP (and many other social enterprise’s like ours) is the lack of financial infrastructure that exists in Guatemala. In the global north, where there is mature financial infrastructure, it is relatively easy for one to get a low-interest rate loan for a few percentage points interest rate. In Guatemala (and other in Latin America), accessing low cost interest rate loans for disenfranchised communities is nearly impossible. In its current form, the traditional financial system in Guatemala is optimized to serve the privileged elites of the country. High interest rates, cumbersome and lengthy processing times that require extensive documentation, alongside structural barriers to even access the traditional financial institutions in the first place make access to dignified financing nearly impossible. As a consequence, those who may not be in privileged positions to access traditional banking services, will end up resorting to lending from either predatory lenders or international microfinancing groups. The challenges with both of these is that they provide substantially higher interest rates for the borrowers (one might be lucky to get a 30% interest rate loan), are hard to access geographically, and still offer a myriad of challenges that prevent many from accessing equitable financing. To paint a clearer picture of what this might look like, below I break down the flow (and implicit challenges) of what it might be for someone to access financing today:

1. An individual has to approach a bank or alternative financing institutions to request a loan. They will ask them for an identity and statements that signal reputation (usually proof of funds and credit history).

   1. Challenge: It is estimated that in Guatemala alone, 400,000 people do not have access to a national identity. There is a disproportionate amount of indigenous representation in the number of people who do not have nationally recognized identity

   2. Challenge: Approximately 50% of Guatemala’s economy is based in the informal economy, meaning there are minimal to no traces of financial transactions that took place

   3. Challenge: The collateral that is often times used in the traditional banking system is not compatible with the proof of funds that many people have, much of the land may not necessarily be directly registered on the national registry, or is divided amongst family members

   4. Challenge: Physical travel to a branch that can extend these services may be long and costly for the individual

2. If the person manages to overcome these challenges, they must then wait for the review process for their loan, which is oftentimes onerous. If the loan is issued through an informal lender, this transaction will happen in cash, as will the repayments.

   1. Challenge: For many, having to wait for long periods of time could be problematic, particularly if there is an urgent need for the loan to be issued.

   2. Challenge: If the loan review process is successful, the interest rate that is extended to the borrower is extraordinarily high, with reported rates of upwards of 100% interest rate.

   3. Challenge: If a cash-based loan, there will be no record of the issuance of the loan, let alone the repayment of the same.

As you can tell, there are substantial barriers for someone to access an equitable loan in Guatemala, particularly if you find yourself in a disenfranchised position. Ultimately, much of this is due to incumbent financial institutions do not necessarily have the interest of last-mile borrowers. As a consequence, those who have most to benefit from decent financing are those who have the hardest time accessing it. This can be attributed both to systemic inefficiencies in the financial market that are structurally set up to de-incentivize development of these communities.

In theory, crypto offers the opportunity to give people everywhere the opportunity to partake in fairer market dynamics, more equitable governance structures, with higher degrees of ownership that are secured through community-based participation. Crypto’s innovation relies on the immutable nature of the blockchain, which allows individuals to transact without seemingly trusted intermediaries. The often-stated example is the role banks play in facilitating lending across individuals and institutions, where they take a hefty cut of the transaction that occurs indirectly across two individuals. Blockchains allow us to circumvent this rent-seeking behavior by unlocking peer-to-peer lending with minimized intermediaries that rely solely on smart contracts validated by participants in the blockchain network. Those who validate the transactions are ultimately rewarded for the security they add to the network, which creates strong incentive alignment amongst the network participants.

Crypto could provide us with the foundations to unlock more equitable financing models globally. Already, we are seeing adoption throughout the global south that provides a strong indication that crypto’s biggest opportunity is in developing countries. Whether it is escaping rampant inflation, providing more efficient payments infrastructure, bringing more sovereignty any privacy to identity solutions, among other use-cases - crypto’s potential is vast. This research therefore takes a very narrow use-case, which is exploring how we could bring undercollateralized last-mile lending to Latin America, specifically Guatemala, via crypto. In order for that to become a reality, there are so many intermediary steps that need to be true. Therefore, by exploring a specific use-case, that has many conditions within it, the intent is to uncover a holistic perspective on how the entire ecosystem will continue to develop and also highlight some of the key players pushing the envelope on last-mile adoption. The audience for this report is aimed at both crypto-native builders who are passionate about the role crypto can play in the ecosystem as well as those who many not necessarily be entirely familiar with the developments in the space and who may be curious to understand how all of the different developments in crypto fit together.

Given the multi-faceted nature of the report, there are a number of methodological research approaches that I have deployed through the course of this research. First, the research questions I sought to answer over the coures of this research are the following:

1. What would it take for last-mile borrowers in Guatemala to be able to access an undercollateralized loan to build their home?

2. What is the current state of the infrastructure, tools, and applications that could aid in that process?

3. What are the wider lessons that the crypto industry could take from providing such a service? What are some of the potential cascading effects that this utility could have on people’s lives outside of the crypto ecosystem?

With those research questions, I conducted primary interviews with the following groups:

1. Last-mile communities who are currently having to access loans through traditional financial institutions or shark loans or that may not be able to access a loan at all?

2. Organizations that provide micro-financing in the region - both local organizations as well as international lending groups.

3. Projects that are already leveraging crypto to drive more financial inclusion or are actively exploring crypto-powered solutions

4. Crypto-native builders, researchers, creators, and developers who are deploying cutting edge projects at the global scale

Over the last six months, the research took place through in-person field visits, online interviews, via a literature review of the existing documentation, through crowd-sourced conversations via social media, and a survey of the existing crypto solutions in place today. In total, over 400 hours went into researching, writing, and producing the content for this research.

To map out the dependencies required to deliver on last-mile lending, we developed a diagram that goes from start to finish to thoroughly explore the necessary steps needed in order to bring this last-mile lending to light. The remainder of this research focuses on the key intervention points highlighted in the diagram below:

The layout for the report is the following:

• Background

• Fundamentals

  • Internet

  • Mobile

  • Education

• Entering crypto

  • Wallets

  • On/off-ramp

  • Identity

• Unlock last-mile lending

  • Undercollateralized lending

  • RWAs

  • Stablecoins

• DeFi’s other opportunities

  • Payments

  • Savings and investments

• Onboarding the masses

  • Decentralized social

  • Art and culture

  • Gaming

• Infrastructure

  • Scalability

  • Composability

  • Privacy

• Ecosystem development

  • Community

  • Developer education

Over the course of the last two years, we have seen unprecedented growth in the crypto ecosystem. Crypto has grown far beyond the capacity of simply buying, selling, and sending assets. There is a world of opportunities that is flourishing throughout the ecosystem - from new financial applications, governance structures, and beyond. Today, it is estimated that over 420 million people hold crypto. At its peak, crypto had a market cap of over 3 trillion dollars and DeFi’s total locked value stood at nearly 200 billion dollars.

We are seeing some of the world’s biggest companies get into crypto adoption as well. With Meta, Reddit, Twitter, Starbucks, among others leading the way for this global adoption phenomenon.

In Latin America, crypto adoption is particularly prevalent. Largely it boils down to crypto’s proposition having the strong value-adds in the region as a consequence of monetary, governance, and right technological landscape.

• Monetary: Many Latin American countries face crippling inflation as a consequence of poor monetary policy by national governments. This has led to volatile and weak currencies which forces many to store their wealth in alternative assets (I’ll discuss this in much further detail in a later section). Further, the traditional financial infrastructure that is present throughout Latin America generally tends to have weak policies that are dependent on the flavor of the current party in power. In addition to that, remittances make use a substantial amount of the value that is transferred to the region, much of which relies on outdated financial rails. Of the transactions that do occur in Latin America, approximately 70% of them are cash-based. Only about 50% of Latin American have access to a bank account, and less than 35% of businesses are able to access a loan or line of credit.

• Governance: Corruption is rampant throughout the region. Plagued by a history of exploitation, our institutions do not respect rule of law, and our societies suffer as a consequence of that. With the exception of a few countries, democratic indicators massively lag in the region.

• Technological adoption: There is Cambrian explosion of digital innovation occurring in the region. Much has been fueled by the growth of the youth who are particularly called towards digital services, including neobanks, cryptocurrency, consumer apps, among others. Moreover, crypto in particular has already seen high degrees of adoption. According to a 35,000 person survey conducted by Mastercard, 51% of the Latin-America based respondents had already made at least one transaction with crypto, which compared to global results came out to only 11%. Crypto development is also particularly strong throughout the region, a study conducted by Jaka Labs found that there were nearly 300 blockchain-based projects throughout the region. Brazil, Argentina, Colombia, and Venezuela are among the top 15 countries ranked by adoption in the world. And of course, El Salvador, was the first country around the world to establish Bitcoin as its national reserve currency - a momentous feat celebrated by many, and criticized by some of crypto’s most steadfast advocates.

All of these conditions theoretically position Latin America as an ideal environmental under which mass adoption of crypto could truly flourish. Crypto could provide us with the foundation to break free from the overbearing and unjust traditional financial and governance structures. It has an ever increasing potential to drastically improve financial inclusion and access. However, we should focus on driving more financial inclusion throughout the systems and communities we develop so as not to leave vulnerable populations behind.

Driving mass adoption will require a concerted effort towards educating, designing, and developing useful technology that makes a meaningful impact in everyday people’s lives. Even though DeFi is still in its relative infancy, it has thus far come to show that we can run a fully trustless peer-to-peer global finance game.

As the trust in the traditional institutions continues to erode across the Americas, building viable alternatives for individuals to continue to live their everyday lives in more trustless ways becomes imperative. Crypto has given many a sense of what is possible with cryptographic technology that supports self-sovereignty, however we must continue to educate and onboard people to share with them that it is much more than simply speculation.

The following section will begin to unpack the dependencies required in order to unlock the access to DeFi throughout Latin America.

The future is undoubtedly mobile. Today, anyone can acquire a simple yet powerful mobile phone for less than $50. With a phone, people around the world can now tap into the internet and access the world’s information. Today, there are more mobile phones than people in Latin America. It is estimated that soon more than 90% of internet access happens through mobile phones. Without a doubt, mass adoption of crypto will happen through mobile phones. Unfortunately, to date, crypto has not been otpmiized for mobile user experience. The applications that are available on mobile are clunky, have slow loading times, and often times are challenging for users to engage with. As more systemic challenge, leading mobile hardware companies (*ahem* Apple) provide predatory application stores that prevent permisionless transactions from taking place natively within mobile phones.

There are a few projects that have identified crypto’s potential with mobile and are developing solutions to focus on adoption through mobile. Celo, a carbon-negative and mobile-first blockchain ecosystem is focusing on developing user experiences that deliver on a user experience that is optimized for mobile adoption. With Celo, users can begin to transact on-chain with the ease of sending a mobile message. Threy have developed a cryptographic scheme known as address-based encryption through which users can link their phone numbers to public keys. Many of the applications that are built on top of Celo also focus for providing a seamless experience on mobiles, which in theory will continue to drastically enhance access to crypto protocols. Celo, and more of the applications built on top of it will be covered in further detail throughout the remainder of the report.

On the hardware-front, there are a couple of projects emerging that may provide a promising future for crypto-native mobile adoption. Polygon is partnering with phone manufacturer Nothing to embed crypto features into their phone. The Nothing phone is Android-based and will provide users with seamless access to decentralized applications, games, and even Polygon ID, Polygon’s identity solution. Solana is also taking an even bigger bet with hardware by developing their own native phone which we can expect will be fully embedded to the Solana blockchain. Interestingly, Helium, a decentralized internet provider (to be discussed in further detail in the following section) will be partnering with Solana to deliver their mobile service.

Of course, access to mobile phones is not merely enough. Being able to connect your mobile to the internet is crucial to driving last-mile adoption of crypto. In Guatemala, internet penetration stands at approximately 65% - this compares to US internet penetration at 93%. Affordability of the internet is a huge challenge - Guatemala’s average income stands at just under $1,500, compared to the US’ average salary which stands at $97,862. Ensuring that everyone has affordable access to the internet is crucial to mass adoption. There are a number of projects emerging to bring more internet access around the world.

Launched in 2019, Giga seeks to connect every school around the world to the internet. They are looking to close the digital divide by connecting schools to the internet, which makes them central points in the communities within which they sit. To date, Giga has connected over 2 million students around the world across 19 different countries through their initiatives. Starlink, an satellite internet initiative is already providing internet coverage to over 50 countries - they aim to eventually provide global internet coverage that requires minimal infrastructure for users. Another interesting project worth mentioning is Helium, a decentralized IoT network that leverages its native token to provide nodes of internet coverage that require little power. The intention is to provide a distributed network of internet providers that can be accessed permisionlessly by anyone around the world.

In the case where internet access may not necessarily be accessible, thinking about alternative means of connecting users with onchain transactions is another innovative approach to overcoming the challenge of internet access. One such project is Machankura, which uses SMS-based messaging to execute on-chain transactions. Similarly, Strike has also unlocked similar functionality whereby users can send Bitcoin to users through GMS networks.

In order for mass adoption to take off, ensuring that education is appropriately delivered for people is crucial. This education is not solely based on crypto-native education, but also focus on wider financial literacy. This wider financial education could focus on the importance of good financial practices including saving, the role of credit in allowing people to improve financial health of a community, the role of inflation in reducing someone’s purchasing power, and exploring the offering and gaps in the current traditional market. Following on from that, sharing an overview of the basic principles of in a digestible way might also be of high value and offer a convenient alternative to the current system. Providing a more robust crypto-native education will give individuals the capacity to trust the protocols they are using as well as the blockchain behind it. Those who understand blockchain’s principles will be at a huge advantage to unleash its full potential. It’s important for us to focus our educational efforts on audiences that are already in disenfranchised positions as they are ultimately those who have most to gain from adopting this technology. Another key factor to consider is that given many of these communities are remote, focusing on mobile education will be a key pillar for driving mass-adoption. This will allow anyone, anywhere the opportunity to learn how to use the latest dApps and protocols without having to travel lengthy distances. Providing diverse educational materials will give a diverse audience the opportunity to engage with the content, irrespective of prior educational experience. Of course, the educational material should be published in local languages - allowing us to reach as wide an audience as possible. The Ecosystem section at the end of this report will dive further into more development-focused education.

If all of the above conditions are met, the intention in the following section is to explore the key elements that explore what it would ultimately take for someone to direclty engage with not solely lending protocols, but also the wider ecosystem. We will be discussing the role of wallets, on/off-ramps as solutions, and identity solutions that could be integrated within the crypto ecosystem.

I start with wallets as I fundamentally believe that wallets will increasingly become the home of our digital lives. Similar to physical wallets, cryptocurrency wallets help us store our digital assets, identities, artwork and keep them safe from theft. Owners of the wallets must cryptographically sign transactions that will allow them to authenticate their transactions. As our lives become increasingly digitized, wallets are poised to play an evermore critical role in the future of crypto adoption. Wallets help users store their private keys securely and use them to carry out transactions with on-chain protocols.

By 2030, the global crypto wallet market size is expected to reach $48.27 billion, with a CAGR of 24.4%. Projects that intend on increasing adoption must focus on enhancing the utility of wallets. Wallets should go far past sending and receiving functions, but rather store our digital on-chain footprint in ways that are both secure and private, all while offering a simple user experience. One of the key challenges wallets can overcome will be to integrate multichain interoperable dApps and protocols (more on this to come).

Unfortunately, most crypto wallets struggle with a few key failure points that are major barriers for mass adoption. From the get-go, wallets are challenging to set up. Often times the interface of the wallets is hard to navigate, the private keys that users have to deal with to access their wallets is inconvenient to store, and users are met with a barrage of data that can often times be overwhelming. Moreover, many of these wallets are highly incompatible with mobile applications, and users may oftentimes be confused as far what transactions they are engaging with. Even the most experienced users find the process of navigating wallets to be arduous and complex.

As wallets are functionally the gateway for people to engage with crypto, there must be a heavy emphasis towards being able to deliver on a seamless user experience - similar to what of leading technology companies today and incumbent financial institutions. From a user experience perspective, taking a leaf from web2 may be a valuable lesson for us to look towards from a seamlessness perspective. It is my belief that wallet builders have a deeply important role when it comes to onboarding more users, and it is not something that should be taken lightly. There are a number of projects looking to address the substantial lack of seamless onboarding for users today. Insofar as the entry into crypto is concerned, there are a few key interventions to explore, particularly when it comes to managing private keys. These are: leveraging social recovery as well as using biometric data in order to open access to wallets. Social recovery gives users the opportunity to recover their wallets from a trusted group of guardians. With regards to biometrics, the use of theoretically uniquely identifiable traits could give users the opportunity to open up and access their wallets without having to hold on to hard to remember private keys.

Another exciting space is developing that provide entirely seamless experiences that leverage technical innovations that allow us to remove the complexity of signing transactions. Account abstraction, gives wallets the permissions to remove the requirements of the logic of having to sign every transaction within wallets. This allows users to engage with complex protocols and applications, without needing the know-how or even gas fees required to execute the transactions. All of this bundled within mobile-native applications, will surely provide users with a seamless experience that.

As was afore mentioned, another key obstacle for users to engage with the traditional financial systems is the lack of identity that is available to many last-mile communities. According to a 2021 World Bank report, around a billion people cannot prove their identity. One in two women in low-income countries do not have a proof of identity. Without a legal identity, people may be excluded from holding fundamental rights including healthcare, education, welfare, and financial services. This challenge is only further exacerbated in already marginalized communities, including rural farmers, migrants, refugees, and stateless person. Just in Latin America, around half of the population remains outside of the formal financial sector.

Often times, last-mile communities rely on paper-based ID’s which may be fragile, easy to misplace, do not allow users to build a verifiable track record on top of the IDs, and generally we have a hard time sensing the more holistic perspective on an individuals activities (whilst of course, adhering to high privacy standards). In contrast, however, robust digital identity may ultimately provide unique benefits for those who hold them including being able to build a track record, enhance the state of voting, fight sybil attack online, and give a much more secure account of someone’s self. The chart below lays out some of the various intervention points and value-add that digital identities unlock.

To date, we’ve seen a number of projects emerge around the world that are looking to drive more financial inclusion by providing digital identities for the citizens of their regions. Thailand’s national ID system has successfully expanded healthcare insurance from 71%-95% in less than two years. Peru has achieved nearly universal identification, which brought in USD 45 million of annual revenue. Nigeria also implemented a digital identity system which removed tens of thousands of ghost workers. Notably, India launched a digital identity system in 2009 called Aadhaar, which sought to provide digital identity for the country’s 1.3 billion people. Today, Aadhaar has reached a penetration of nearly 99.7%. This has led to 85% of citizens having access to digital banking and allowing the bank of India to deliver financial aid to its citizens in much more efficient manners. This was the case when they delivered subsidies for gasoline, which saves the government approximately $1 billion USD per year.

There is a strong interest across the world who are passionate about the role self-sovereign identity could play in giving people control over their identity and provide them with formal financial services. As more global economic activity will shift to an on-chain model, making every transaction transparent and resulting in the creation of a new public good: an immutable, publicly available credit history, as well as a reduction in the significant transaction costs associated with banking. The objective is to gather information created in both real life and online and use it to build a user’s reputation that can be applied on-chain.

Bootstrapping on-chain identity is a valuable approach as it allows one to leverage a number of different activities that can be verified on-chain, whether that is through historical records of successful repayments, other financial activity, participation in governance, among a number of other indicators. There are a couple of challenges that still must be overcome in order for DeFi to leverage on-chain identity and that is ultimately the question of privacy, where we can avoid building social credit scores that bar people from accessing loans, but rather serve as a platform to provide credit systems to worthy borrowers. The issue, however, is that some of the more rich data that is available that would allow one to make an accurate assessment of the extent to which a part is capable of taking a  healthy loan is off-chain. Therefore, what we must do is create better mechanisms through which individuals can ultimately prove their financial history by porting some of that data on-chain. Being able to port off-chain data on-chain will also serve as an important unlock to bring more visibility from credit-worthiness of borrowers.

A crucial component within the digital identity space is ensuring that ensuring strong data protection, preventing leakage of data, and preserving customer privacy is essential. With a decentralized digital ID, an individual’s wallet can serve as their credential hub where they can prove their credentials provided to them from a multitude of issuers, rather than having to rely on paper-based trails or word-of-mouth. An individual can also self-select which aspects of their identity they wish to disclose to different parties. Doing so enables individuals to have their identity validated with the groups of their choice.

On-ramps are the services that allow users to buy crypto currency directly from fiat. Off-ramps work the other way, they allow individuals to go from crypto to fiat. At the moment, this is currently one of crypto’s primary bottlenecks when it comes to mass-adoption. In crypto’s earlier days, one had to rely on wiring funds to unknown parties to receive crypto in exchange, which thankfully has drastically changed. There are a number of challenges to on/off-rampin today, including KYC/AML requirements, the need for pre-existing banking infrastructure, conversion rates, a person’s safety and trust they have to place on any given project. Ideally, we would live in a world where we do not have to rely on the need to convert crypto into fiat and vice versa, as the network effects and adoption globally mean we do not have to rely on fiat currency. Until that moment, however, there are a number of solutions that could aid in making the conversion process much easier. These are:

• Peer-to-peer (P2P) exchanges - whereby users can transact with one another without needing a trusted third party to facilitate the conversion process. Historically, these have happened through online forums or in trusted groups. Building the infrastructure for P2P can be challenging as its requires a platform that connects users, however that same platform cannot guarantee entirely the reputation of a user within that platform.

• Crypto ATMs: To facilitate these P2P exchanges, the use of ATMs also provide a viable solution. Functionally, an individual can simply approach a pre-loaded ATM whereby they do not have to deal with individuals in real time, but rather can asynchronously exchange crypto into fiat and back.

• Local exchanges: Another key solution is to provide exchange facilities at the micro scale. It is common for there to be Moneygram exchange facilities in some of the most remote rural areas of Guatemala, which could potentially translate to having nodes of exchanges throughout trusted locales whereby individuals can exchange their assets back and forth. Coinbase recently launched off-ramps in Mexico across 37,000 locations by partnering with Mexico’s largest convenience store, Oxxo, where people can simply send their crypto to an address and the store clerk facilitates the withdrawal of the funds.

Now that we have reviewed some of the basic requirements both to access crypto as well as the solutions required for people to engage with crypto protocols, this next section aims to explore the current state of DeFi lending, identify some of the key challenges in the space, explore opportunities regarding bringing last-mile lending to the masses.

Despite the current bear market that the crypto industry finds itself in, DeFi adoption has remained relatively strong. DeFi users stand at approximately 6.5 million people, which is a substantial jump when compared to just 940,000 users at the start of 2021. At its peak, DeFi TVL hit nearly $200 billion in value and institutional adoption is also on the rise, with many players such as JPMorgan, beginning to engage with the ecosystem.

The state of DeFi today looks something like this: Developers design smart contract logic which is built on top of a particular blockchain. These smart contracts are then wrapped into a user-facing front-end, which is known as a decentralized application (or dApp). Those who are looking to lend their money, can provide liquidity into a smart contract in order to enable borrowing to occur for users - these individuals are known as liquidity providers (LPs). LPs deposit their funds into liquidity pools, which LPs are incentivized to do so as they receive a small percentage of the trade that occurs when borrowers tap into the liquidity and borrow money.

Borrowers interact directly with liquidity pools, rather than having to deal with individual lenders. This makes the efficiency of capital much easier to flow on-chain without having to deal with intricate lending strategies. In its current state, borrowers must deposit collateral that is higher than the amount that they are lending from. Depending on the type of collateral that is deposited, borrowers may face liquidation of their collateral - particularly if the collateral that is posted is a volatile asset. The borrower can then select what type of rate they want - whether that is fixed or variable. Most utilize stablecoins to lend, as there is a decreased chance of being liquidated against their assets. These lending and borrowing dApps are accessible through wallets. Users just have to connect their wallets to the applications, after which they then deposit collateral to take out a loan.

In DeFi, users can automatically transact with one another, without the need for having supposedly trusted rent-seeking intermediaries, such as banks to facilitate the transaction. The use of smart contracts allows for self-executing programs to function in such a way whereby users can engage with predetermined outcomes and agreements set by the smart contract. On the borrower's side, DeFi may struggle to compete with traditional financial institutions for the time being. Due to the fact that a majority of DeFi loans require a substantial over-collateralization and a relatively high degree of technical know-how, in its current form we are unlikely to see mass-adoption. However, on the lender’s side, DeFi already provides decently attractive rates, particularly when compared to savings rates in traditional financial bank accounts.

Today, most of DeFi, in its current form, remains overcollateralized. As recent collapses of CeFi has come to take shape, decentralized finance has remained steady and strong. Whilst FTX, Celsius, and BlockFi, among others were facing a solvency crisis, the Aave’s and Compound’s of the DeFi world remained steadfast and unscathed in the face of the recent market downturn. Largely, this is as a consequence of the overcollateralized nature of the protocols, which require users to deposit more funds than they are taking a loan out for. From a capital efficiency standpoint, this is a truly poor mechanism design.

Undercollateralized lending has been the holy grail of DeFi, pretty much since its inception. Unsecured lending seems like a big, hairy challenge for DeFi, but it is much more commonplace in our day to day lives than many might think. For example, many already use credit cards on a daily basis, or in some cases have an unforgiving student loan to repay. In such a case, you are already partaking in an undercollateralized loan process! The institutional version of this might look a lot more like a line of credit, an agreement whereby two parties can establish a loan based on predetermined terms and a particular outcome that will emerge from the loan.

The undercollateralized lending space is one that is hailed as one of the key unlocks to crypto’s future. By that said, there is major work that needs to be done in order for these mechanisms to go mainstream. Many existing protocols have gotten a fair degree of traction to date, but there is still much work to be done. Undercollateralized lending is inherently a more risky practice for lenders, since the collateral that is posted by borrowers does not cover the full amount of the loan that is taken out. Therefore, creating more trust for the borrowers that are accessing the loans is essential.

To create more robust lending and borrowing environments, it is crucial to be able to understand the extent to which borrowers (and lenders) are trustworthy parties in a transaction. One approach towards doing so could rely on credit data, which could showcase the financial practices of individuals or groups insofar as their historical data might suggest. The more data that one is able to see when it comes to borrowers, the better-informed decision a lender can make when it comes to establishing their on-chain history. Crypto rails give us the opportunity to increase transparency, enforce covenants through smart contracts, automate repayments, reduce risk of loans, and ensuring there is much more access to lend and borrow across the space.

There have been a number of attempts to bring undercollateralized lending in the crypto space, some of these have failed miserably and have ultimately been much of the cause for much of the havoc caused in crypto as of late.  Let’s explore why many of these centralized finance providers failed in the first place. The primary issue is that they were running run-of-the-mill lending businesses that were not truly crypto-native. They were simply tapping into the liquidity of crypto, without necessarily providing the appropriate guardrails that crypto could potentially offer. Below, I unpack some of the faults that many of these centralized finance providers failed on.

The FTX collapse was largely onset by the over-reliance on FTX’s native-token FTT that was used by Alameda Research to back their loans. Due to the illiquid nature of the tokens, the value that these tokens had at face-value was much higher than what their true valuation might suggest. As selling pressure began decreasing the value of the token, there was a cascading effect of decrease in value that ultimately led to the demise of the fall of Alameda’s loans.

According to an analysis conducted by Bankless on the state of undercollateralized DeFi lending, at the time of writing the DeFi-native protocols had $419M TVL, which they showcase their respective holdings below:

Many of these protocols rely on the TradFi mechanisms for borrowing, whereby borrowers go through a due-diligences process and are then whitelisted to access DeFi liquidity. For some of these protocols, the underwriting process relies on the community themselves and the native token to secure the loan. TrueFi, for example, requires that loans that are requested by their platform must be approved by an 80% vote by the stakers of their token. Some protocols, on the other hand, require third party risk assessors and auditors to assess their potential borrowers. If their application to go through the due diligence process is completed, then there is an off-chain agreement that is established in order to secure the loan in the real world. Some of the biggest institutions in the crypto industry that are seeking undercollateralized lending go through this mechanism of approving the loans. The risk here is based on the fact that if the borrowers default on their loan, there is often little recourse as far as what individuals can turn to in order to get some of their funds back that they may have deposited into a pool.

Crypto rails give us the opportunity to increase transparency, enforce covenants through smart contracts, automate repayments, reduce risk of loans, and ensuring there is much more access to lend and borrow across the space. To create more robust lending and borrowing environments, it is crucial to be able to understand the extent to which borrowers (and lenders) are trustworthy parties in a transaction. One approach towards doing so could rely on credit data, which could showcase the financial practices of individuals or groups insofar as their historical data might suggest. The more data that one is able to see when it comes to borrowers, the better-informed decision a lender can make when it comes to establishing their on-chain history. Bringing uncollateralized lending to DeFi is the opportunity to onboard newcomers to the space, but also to empower millions, if not billions of people around the world.

Another important step towards bringing more liquidity and unlock undercollateralized lending will be the capacity to represent real world assets on chain. The challenges that still remain here are the risk of having to deal with illiquid assets, in the case of a default and having to go through a process of reclaiming the asset through the existing legal systems. This is still an early market, but a prescient narrative throughout the crypto ecosystem as of late.

What are real world assets (RWAs)? RWAs are tangible assets or financial primitives that could be brought on-chain. Some examples of RWAs are: Cash, real estate, debt notes, insurance, salaries/invoices, metals, among others. RWAs comprise a majority of the global financial market value. The fixed income markets, for example, comprise an estimated value of $127 trillion the total value of real estate is $362 trillion, and gold has a market capitalization of $11 trillion. In the traditional financial world, real world assets represent a key pillar for the financial activities we see today.

Real world assets are not a new concept within the crypto ecosystem. Recently, Vitalik published a blog post where he mentioned that real world assets are an avenue that excite him as a use-case for crypto’s potential in the world. If one looks at the way stablecoins operate today, they are functionally real world assets on-chain. In addition to bringing more utility to crypto, real world assets bring a scaling factor to DeFi as it addresses the question of where yield is ultimately derived from in DeFi. In its current model, much of the yield that is generated in DeFi is a result of up-only environments. By bringing real world assets on-chain, we can diversity the yield generation that is available in DeFi.

For last-mile communities, being able to bring real world assets on chain could prove to be highly valuable as it could unlock trapped liquidity in the holdings of these communities. By doing so, they could potentially leverage these RWAs as collateral for accessing last-mile loans that are backed by land.

One of the key RWAs that already plays an important role in the ecosystem are stablecoins. Stablecoins are cryptocurrencies designed to maintain a stable value relative to a specific asset, such as the US dollar or gold. Unlike traditional cryptocurrencies like Bitcoin or Ethereum, which are known for their volatility and price fluctuations, stablecoins are designed to maintain a consistent value over time.

Stablecoins achieve this stability by being pegged to a stable asset, such as the US dollar or another fiat currency, a commodity, or a basket of assets. This ensures that the value of the stablecoin remains relatively constant and predictable, making it more practical for everyday use in commerce.

Some of the key benefits of stablecoins include:

• Reduced Volatility: Stablecoins can help reduce the volatility of cryptocurrencies by providing a more stable and predictable alternative.

• Accessibility: Stablecoins can be used by anyone with an internet connection, regardless of where they are located, and can be easily exchanged for other cryptocurrencies or fiat currencies.

• Security: Stablecoins are typically issued by reputable organizations and are backed by collateral or reserves, making them more secure and less susceptible to hacking or fraud.

• Speed and Efficiency: Stablecoins can be transferred quickly and easily, often with lower transaction fees than traditional methods of payment.

• Decentralization: Stablecoins can be used in decentralized applications, such as decentralized exchanges or lending platforms, which can offer greater transparency and security compared to centralized counterparts.

Overall, stablecoins provide a much-needed stable and reliable bridge between the traditional financial system and the world of cryptocurrencies, making it easier for people to use digital currencies in their daily lives.

Stablecoins face several challenges in Latin America, including regulatory uncertainty, economic instability, and a lack of trust in digital currencies. Many countries in the region have yet to develop comprehensive regulatory frameworks for stablecoins, which can create uncertainty and hinder their adoption. This can make it difficult for stablecoin issuers to operate in the region and can limit the ability of consumers to access and use stablecoins for transactions and as a store of value. Addressing these challenges will require collaboration between governments, financial institutions, and technology companies to develop the necessary infrastructure and regulatory frameworks to support the use of stablecoins in the region. It will also require building trust and educating people about the benefits and risks of using stablecoins as a means of payment and store of value.

Insurance plays a critical role in facilitating last mile DeFi lending in the crypto space. Last mile lending refers to the ability to provide financial services to individuals and businesses in underserved or remote areas. THe risks associated with lending in the crypto space, including price volatility and security breaches, can create uncertainty and make it difficult for lenders to provide loans.

Insurance plays a critical role in facilitating last mile DeFi lending in the crypto space. Last mile lending refers to the ability to provide financial services to individuals and businesses in underserved or remote areas. DeFi lending can help address this challenge by providing access to financial services through a decentralized platform. However, the risks associated with lending in the crypto space, including price volatility and security breaches, can create uncertainty and make it difficult for lenders to provide loans.

Insurance can help mitigate these risks and provide assurance to lenders that their funds are protected in the event of a loss. Insurance providers can offer coverage against a range of risks, including smart contract failure, price volatility, and security breaches. This can help incentivize more lenders to participate in DeFi lending and can help extend access to financial services to individuals and businesses in underserved areas. Ultimately, insurance can play a critical role in promoting the growth and adoption of DeFi lending in the crypto space, making it more accessible and reliable for people around the world.

Decentralized insurance providers, such as Nexus Mutual, play a crucial role in the crypto space by providing a decentralized alternative to traditional insurance providers. These platforms operate on the blockchain and allow individuals to pool their funds to protect against a range of risks, including smart contract failure, price volatility, and security breaches.

One of the key benefits of decentralized insurance providers is that they are transparent and autonomous. Policyholders have a say in how the platform is run, and claims are processed automatically through smart contracts, eliminating the need for intermediaries and reducing the risk of fraud or corruption. This can help increase trust in the insurance industry and improve access to coverage for people who may have been underserved by traditional insurance providers.

Nexus Mutual, for example, allows policyholders to vote on which claims should be paid out, ensuring that claims are processed fairly and transparently. The platform also offers coverage against a range of risks, including smart contract hacks, custody loss, and oracle failure. Additionally, Nexus Mutual's coverage is backed by a pool of funds held in a smart contract, which ensures that policyholders are paid out in the event of a valid claim. By improving access to coverage and reducing the risk of fraud or corruption, these platforms can help promote the growth and adoption of the crypto industry and make it more accessible and reliable for people around the world.

The IMF recently found that in Latin America’s five biggest economies (Brazil, Chile, Colombia, Mexico, and Peru) faced a 12.1% inflation - which was a 25% year high. In Venezuela and Argentina - the situation is even more dire with an inflation rate of 114% and 79%, respectively.

While some critique the volatility of crypto, the value proposition when compared to the inflation of many fiat currencies throughout many Latin American countries is particularly useful. Many Latin Americans would rather hold a digital asset that fluctuates both upwards and down, rather than a fiat currency that is perpetually spiraling downwards.

DeFi protocols such as Compound and Aave allow users to earn yield on their crypto assets by lending them to borrowers. By earning yield on their crypto assets, users can protect against the erosion of fiat currency value due to inflation. Additionally, DeFi savings accounts such as Yearn Finance and Curve allow users to earn yield on stablecoins, which are pegged to the value of fiat currency. This can provide an attractive alternative to traditional savings accounts, which may offer little protection against inflation. Overall, the potential for savings and yield products in DeFi to provide solutions for high inflation in Latin America is significant and could help improve access to financial services and protect against the impact of inflation on individual wealth.

Building a global peer-to-peer payments network is without a doubt one of the use-cases for crypto that is within reach and will be a key driver of mass adoption for crypto. Latin Americans make up 8% of the world’s population, yet account for 20% of the total world’s remittance volume. Remittances play an important role in Latin America economies.Migrant workers who send money back home to Latin America comprise nearly $150 billion of value transferred back to Latin America. On-chain payments have the opportunity to address some of the key challenges that currently face these mechanisms including slow settlement and high costs of payments.

Recently, Uniswap and Circle co-authored a paper on the opportunity to disrupt the foreign exchange (FX) markets with decentralized finance. The FX market facilitates over $7 trillion in currency exchange a day, which presents a substantial opportunity for DeFi to tackle. The Uniswap and Circle study found that they could reduce the cost of remittance payments by approximately 80% - a cost that is expected to continue to fall as there are better on/off-ramps as well as more robust scaling solutions. With remittance payments of over $550 billion per year for low-middle income countries, there is a substantial impact to be developed to enhance economic savings for families in need.

The use of cryptocurrencies as a means of payment in Latin America faces several challenges. One of the most significant obstacles is the lack of infrastructure and adoption of cryptocurrencies in the region, which makes it difficult for merchants to accept these digital currencies. Additionally, there is a lack of regulatory clarity and legal frameworks for crypto transactions, which can create uncertainty and hinder adoption. The volatility of cryptocurrencies can also be a concern, as prices can fluctuate rapidly, making it difficult to use them as a reliable medium of exchange. Finally, there is the issue of security, as many people in Latin America are still unfamiliar with the technology and may not know how to protect their crypto wallets from hacking or theft. Overall, while cryptocurrencies offer many benefits, such as lower transaction fees and faster settlement times, the challenges of adoption and regulation in Latin America make it difficult to use them as a reliable means of payment.

In order for blockchains to power more equitable futures, it is imperative that we focus on delivering mass adoption in ways whereby users feel they gain substantial value from their interactions with applications and protocols. By getting more people to engage with on-chain platforms, users will also be able to generate self-sovereign data that they can selectively use in order to unlock new utility across crypto. The following section explores some of the other key interventions that crypto will continue to drive value in as far as bringing more mass adoption across decentralized social, culture and art, as well as gaming.

Without a doubt, social media plays a key role in our day-to-day lives. Facebook, Instagram, TikTok, YouTube, and many other have drastically changed the way we interact with one another and are generally developing much more open forms of communications with people throughout Latin America. Social platforms encourage connection, community, sharing, and knowledge-creation. We can use social media to drive social, cultural, and political change as well as raise funds and create strong relationships around the world. Further social media allows us to develop social graphs that map all the users on the platform that allows one to understand the relationships between people.

Incumbent social media platforms face several issues that decentralized social protocols could address. One issue is the lack of user control over their data, as centralized platforms often collect and use user data without explicit consent or compensation. Decentralized protocols can provide users with more control over their data and enable them to choose how and with whom they share it. Another issue is the risk of censorship or content moderation biases, as centralized platforms often have opaque and inconsistent policies for moderating user-generated content. Decentralized protocols can enable more transparent and community-driven moderation mechanisms that are less susceptible to bias or manipulation. Finally, centralized platforms can be vulnerable to single points of failure or security breaches, as they rely on centralized servers and infrastructure. Decentralized protocols can distribute data storage and processing across a network of nodes, making them more resilient to attacks and downtime.

Several notable decentralized social protocols have launched to date, offering alternative social networking experiences that prioritize user privacy, control, and ownership. One of the newer protocols is the Lens Protocol, which is designed to enable social media creators and influencers to build their own decentralized social networks that are owned and controlled by their audiences. Lens Protocol allows creators to monetize their content directly through their network, without the need for intermediaries or advertising-based revenue models. Users can participate in the governance and moderation of the network, and they have more control over their data and privacy. Other notable decentralized social protocols include Mastodon, Diaspora, Scuttlebutt, Solid, and ActivityPub, each with their own unique features and capabilities. These protocols offer users an alternative to the centralized social media platforms that dominate the market, providing greater control and ownership over their data, as well as more resilient and community-driven networks that prioritize user needs and values.

Decentralized social protocols offer several benefits for mass onboarding of people into crypto. These protocols can increase awareness and education about cryptocurrencies, making it easy for new users to learn about and use them. By providing a more intuitive and user-friendly interface, decentralized social protocols can lower the barriers to entry for new users. Additionally, these protocols can build trust and transparency in the crypto industry by enabling peer-to-peer communication and community-driven governance and moderation. Decentralized social protocols can incentivize users to participate in the network through token rewards or other mechanisms, creating a more engaged and active community of users. Moreover, these protocols can provide greater privacy and security for users by enabling them to own and control their data and participate in the governance and moderation of the network, reducing the risk of hacks, data breaches, and other security vulnerabilities that are common in centralized social media platforms. Overall, decentralized social protocols can provide a more user-friendly, transparent, and secure environment for onboarding new users into the crypto industry, driving greater adoption and mainstream acceptance of crypto.

Crypto gaming provides several advantages that can help drive mass adoption of cryptocurrencies. Firstly, it provides an innovative and exciting way for players to earn cryptocurrencies through gameplay. Players can earn crypto rewards by completing in-game tasks or challenges, which can then be used to purchase in-game items or even traded on cryptocurrency exchanges. This creates a new revenue stream for players and incentivizes them to learn about and use cryptocurrencies.

Secondly, crypto gaming can help to overcome some of the barriers to adoption that exist in traditional cryptocurrency use cases. Gaming is a highly accessible and popular form of entertainment that appeals to a broad range of audiences. By integrating cryptocurrencies into gaming, users can experience the benefits of blockchain technology in a fun and engaging way that is more relatable and accessible, helping to drive greater adoption and acceptance of cryptocurrencies among the masses. Additionally, crypto gaming can help to educate users about the technical and practical aspects of cryptocurrencies, such as wallet management, blockchain transactions, and token economics, in a way that is more interactive and engaging than traditional learning methods.

Overall, crypto gaming offers a unique and innovative way to drive mass adoption of cryptocurrencies. It creates new revenue streams for players, provides an engaging way for users to learn about and use cryptocurrencies, and overcomes some of the barriers to adoption that exist in traditional cryptocurrency use cases. As more gaming platforms and developers integrate cryptocurrencies into their games, we can expect to see greater adoption and acceptance of cryptocurrencies among mainstream audiences.

On the crypto infrastructure front, there is still much work to be done in order for crypto to reach a point where they can handle the transaction load of billions of people around the world. And moreover, do so in ways that are decentralized, credibly neutral, and offer sufficient privacy- whilst also providing affordable rates for users of the chains.

A substantial majority of today’s DeFi activity takes place on the Ethereum network which has led to a rise in network congestion on Ethereum, and subsequently expensive transaction fees. At times, users have had to pay hundreds of dollars to execute a single transaction, which makes Ethereum’s capacity to become accessible to users around the world impossible.

As a consequence of this, a number of solutions have emerged on the market, both as direct scaling solutions built on top of Ethereum, as well as entirely new blockchains that do not rely on Ethereum’s security to do so. In the first camp, a number of Layer 2’s and sidechains have risen to fame, including Optimism, Polygon, StarkWare, and Arbitrum to name a few. On the other hand, leading Layer 1 blockchains, such as Solana, Avalanche, Celo and others do not rely directly on Ethereum’s infrastructure, but rather have built their own blockchain.

Optimism is a scaling solution for Ethereum that's designed to provide lightning-fast transactions at a fraction of the cost. It works by processing transactions off-chain and then submitting them to the Ethereum mainnet for finality. This allows Optimism to achieve much higher throughput than the Ethereum mainnet, while still maintaining security and decentralization.

Optimism is one of the most popular L2 scaling solutions for Ethereum, and it's already being used by a number of popular decentralized applications (dApps), including Uniswap, Synthetix, and Aave. As the demand for Ethereum continues to grow, Optimism is well-positioned to help scale the network and make it more accessible to a wider range of users.

One of the main challenges of scaling for layer 2 solutions and other layer 1 blockchains is balancing scalability with security and decentralization. Some scaling solutions sacrifice security and decentralization to achieve greater scalability, which can make them more vulnerable to attacks and centralization risks. Conversely, maintaining high levels of security and decentralization can limit the speed and scalability of these solutions, making them less competitive in the market.

Additionally, there is a lack of standardization and interoperability among different layer 2 solutions and layer 1 blockchains, which can create silos and limit the efficiency and usability of these networks. This can also create challenges for developers and users who need to navigate different protocols, networks, and standards when building or using applications across multiple networks.

Overall, scaling is a complex and multifaceted challenge for layer 2 solutions and other layer 1 blockchains. Balancing scalability with security and decentralization, standardizing protocols and interoperability, and optimizing network efficiency and usability are all key areas that need to be addressed to overcome these challenges and enable the widespread adoption and success of these solutions.

One of crypto’s primary challenges at the moment is the nature of multiple chains that exist across the ecosystem. At the moment, it is challenging for users to transact across multiple chains. As a consequence we have seen high degrees of tribalism emerge across a number of chains in the ecosystem.

Whether you believe in a winner take all future, where one chain will dominate in utility or see a future where multiple chains will ultimately seamlessly inter-operate with one another, crosschain integration and interoperability of dApps and protocols is essential to mass adoption. Ultimately, end-users are unlikely to care about which chain they are using - in a similar fashion as you do not care deeply about the underpinnings of the browser you are currently reading this on.

With the multitude of blockchains that are currently available on the market, it is imperative to provide end-users with a seamless experience. Certain blockchains provide better services than others, each of them ultimately makes their own trade-offs when it comes to the capacity for each of them to scale. In its present state, going from one blockchain to another has proven to be highly complicated and cumbersome for even some of the more advanced users. Additionally, due to the complexity of bridges, these have seen some of crypto’s most harmful attacks.

Privacy is important in blockchains as it protects user data and transactional information from unauthorized access, ensuring individuals retain control over their personal information and financial transactions. It enhances security and trustworthiness of blockchains, reducing the risk of data breaches and hacks. To develop more privacy-centric blockchains, integrating privacy-preserving technologies and creating privacy-focused protocols and standards are critical. This can help obfuscate user data and transactional information, make it difficult for external parties to track user activity, and prioritize privacy and anonymity in the blockchain's design. Promoting user education and awareness around privacy in blockchains is also necessary to demand privacy-centric features from blockchain developers and service providers.

Overall, prioritizing privacy in blockchains can ensure user security, trust, and autonomy. By integrating privacy-preserving technologies, creating privacy-focused protocols and standards, and promoting user education and awareness, we can build more secure and trustworthy networks that better serve the needs of users and society at large.

One crucial element to consider when developing solutions fit for emerging economies is to take into account the wider ecosystem within which they sit, rather than seeing the development as siloed. Each of the communities where crypto solutions could be deployed have deep intricate relationships across the ecosystems within which they sit.

Establishing a local community in Latin America is crucial when deploying crypto solutions for several reasons. Firstly, the cryptocurrency landscape in Latin America is unique and varies significantly from other regions. A local community will provide valuable insights into the cultural and economic dynamics of the region. This knowledge will be essential in creating tailored solutions that meet the specific needs of the local population. By involving the community, stakeholders can learn about the challenges and opportunities that exist in the region and develop strategies to address them.

Secondly, building a local community can help to promote trust and adoption of cryptocurrencies in Latin America. Crypto solutions have faced numerous challenges in the region, including lack of understanding, skepticism, and fear. By engaging with the community, stakeholders can address these challenges and promote a better understanding of the benefits of using cryptocurrencies. A strong local community can also help to promote the adoption of crypto solutions by providing education and training to individuals and businesses in the region. This can help to create a more robust ecosystem that supports the growth and adoption of cryptocurrencies in Latin America.

Local developer education is crucial for the growth and success of technology and innovation in any region, including Latin America. Education plays a critical role in equipping local developers with the skills and knowledge needed to build and maintain complex technological solutions. By providing access to high-quality education and training, local developers can gain a deeper understanding of emerging technologies, including cryptocurrencies, and learn how to develop solutions that meet the unique needs of their communities.

Moreover, local developer education can also help to promote a more inclusive and diverse tech industry. Historically, the tech industry has been dominated by a narrow demographic, leading to a lack of diversity in the field. By providing education and training opportunities to local developers in Latin America, the industry can benefit from a more diverse range of perspectives, ideas, and solutions. This can lead to the development of more innovative and inclusive technologies that better serve the needs of local communities.

Working closely with regulators is essential when developing DeFi solutions in Latin America. Regulators play a critical role in protecting consumers and ensuring the stability and integrity of financial systems. A poll by McKinsey found that 87% of public servants reported a lack of technological capabilities, which drastically limited their potential to grapple with and integrate innovative technology-powered frontiers. As a consequence, government regulators may find themselves in opposition to innovative deployments of technology, particularly given they may not fully understand crypto. By working collaboratively with regulators, stakeholders can gain a better understanding of the legal and regulatory framework within which they operate. This can help to ensure that DeFi solutions comply with local laws and regulations, promoting trust and adoption of these solutions among consumers and businesses in the region.

However, it is also essential to avoid stifling innovation when working with regulators. The DeFi industry is still in its infancy, and stakeholders must have the flexibility to experiment and develop new solutions. By working closely with regulators, stakeholders can create a regulatory environment that promotes innovation while ensuring consumer protection and maintaining the stability of financial systems. A collaborative approach to regulation can also help to identify potential risks and challenges associated with DeFi solutions, allowing stakeholders to develop effective risk mitigation strategies and safeguards. In this way, working closely with regulators can help to promote the growth and adoption of DeFi solutions in Latin America while ensuring consumer protection and regulatory compliance.

Thank you for taking the time to read the first version of this report! Over the course of the next couple of weeks, this document will remain open for reviewers to provide their feedback on the report. In particular, I am looking to get feedback on the flow, on the extent to which the report has answered questions the reader had, as well as what sections may be worthwhile diving deeper and providing more context around. I am also currently recording podcasts with leading builders and on-the-ground communities who are passionate about crypto’s potential to drive real world impact in Latin America. Together, we will be discovering the key intervention points for crypto and exploring the various avenues to reach mass adoption. You can follow along the latest updates by subscribing to my Mirror, and connecting on Lens and Twitter.

I would like to express my sincere gratitude to the Ethereum Foundation, Lens Protocol, and Celo Foundation for their unwavering support and sponsorship of my report on the potential for DeFi in Latin America. Their support has been invaluable in bringing this project to fruition and providing a platform for discussing the challenges and opportunities of DeFi in the region. Their contributions have enabled me to explore the potential of DeFi to promote financial inclusion and economic development in Latin America, and I am truly grateful for their generosity and commitment to this cause.

I would also like to extend my thanks to the reviewers and collaborators who provided invaluable feedback and insights throughout the project. Their expertise and guidance have been instrumental in shaping the report and ensuring its accuracy and relevance. I am grateful for their time and effort in reviewing the report and providing valuable feedback, which has helped to improve the quality and impact of the project.

Ethereum Foundation Fellowship: The Fellowship program is a forum for leaders who are driven by leveraging Ethereum as a public good to help billions of people coordinate and thrive. The Fellowship program aims to support individuals who are passionate about identifying barriers to mass-adoption and breaking down the barriers for underrepresented communities to access crypto.

Celo Foundation: Celo is the blockchain built for the real world. Carbon-negative, mobile-first and EVM-compatible, Celo is leading a thriving new digital economy for all. Build together and prosper.