Decentralized finance (DeFi) has gained significant traction since its emergence in 2018, often celebrated for its ability to disrupt traditional financial services. However, Arjun Sethi, co-CEO of Kraken, highlighted in a recent episode of Fortune’s Crypto Playbook vodcast that DeFi not only disrupts, but also unifies multiple facets of finance.
During the discussion, Sethi elaborated on how traditional banks tend to create “walled gardens” around their financial services, managing customer assets and transactions through selected partners without giving customers a voice in the process. DeFi, in stark contrast, operates through a framework of open protocols, empowering users to control the handling of their own assets. This structuring allows for a seamless integration of various financial tools, offering a fresh perspective on the financial landscape.
Sethi emphasized the transformative potential of DeFi, asserting, “What you are able to do is to defragment what you have across all these traditional financial markets.” He noted that this aspect is often overlooked in discussions surrounding decentralized finance, illustrating the unique opportunities that it presents.
Despite its promise, DeFi tools have typically remained inaccessible to average consumers due to their complexity. However, advancements from companies like Kraken are making strides to bridge this gap. By developing user-friendly interfaces, Kraken aims to facilitate access to DeFi in a manner that mirrors the experience of traditional banking or brokerage services.
One of Kraken’s innovative offerings is xStocks, which allows for the tokenization of well-known companies like Apple and Tesla. Sethi pointed out that xStocks have proven particularly attractive in markets such as South Africa and Argentina. The advantage of DeFi technology means that the purchase costs are significantly lower, as they eliminate intermediary fees that often inflate the price by 10% to 15%.
The decentralized nature of xStocks enables them not only to be traded on Kraken but also across any platform that utilizes the sufficient protocols, marking a significant departure from the limitations typically imposed by traditional brokerages. Currently available in a variety of international markets and in Europe, xStocks are expected to be launched in the U.S. by early next year. Kraken currently offers around 50 tokenized shares, but plans to expand this to 100 and eventually to 1,000 popular stocks.
In the interview conducted at Fortune’s Brainstorm Finance event in Park City, Utah, Sethi delved into the underlying technologies that drive tokenization and laid out expectations for the future expansion of DeFi. For audiences eager to learn more about his insights and the broader implications of this evolving sector, the complete interview and previous episodes of Crypto Playbook are available across various streaming platforms.
