Thesis: A DeFi Futures Product Bringing the Best of Hedging, Low Cost, and Maritime Finance

Decentralized finance (DeFi) offers excellent tools for secure local or cross-border transactions where they are legal but technically challenging. From ancient Mediterranean trade to modern global commerce, trusted intermediaries have facilitated secure transactions for real goods.

Background

Banking has become restrictive, impacting both underserved populations and successful businesses. Cross-border transactions are particularly affected. As highlighted in “Treasury’s War” by Juan Zarate, the US Department of Treasury has tightened security, often affecting ordinary people. Despite high regulatory costs, these measures have limited effectiveness in deterring criminals. Recent geopolitical issues, such as tariffs and trade restrictions post-2022 Ukraine War, have further strained global commerce, squeezing honest businesses.

Despite De-Dollarization, People Still Think in Dollars

During my 2024 visit to Russia, I encountered significant challenges with local banking systems, which differ from US and EU systems. Establishing a bank account can be problematic due to multiple currency conversions. Despite these hurdles, legal professionals still preferred dollar contracts. However, wire or SWIFT instructions were unavailable, leading to costly payment services.

Less Extreme Cases with Poor Transactions

Attempts to arbitrage Bitcoin-Dollar exchange rates between India and the USA faced obstacles due to rigid banking controls. Blockchain transactions, though cheaper, highlight the difficulty in transferring money internationally. On Indian crypto exchanges I’ve seen transfer costs at literally 100 times that of the USA exchanges.

An Elegant, Inexpensive Solution: Decentralized Finance

Decentralized Finance (DeFi) with cryptocurrency is a promising solution. It offers secure and efficient transactions through platforms like DXDY, Uniswap, or PancakeSwap. Key benefits include visible collateral and transferable bearer instruments (“TBI”). For example, a contract for oil delivery can adjust based on various currencies and assets. TBI is really important because the contract itself could be in the hands of, for example, your accountant at the delivery point. His instructions would be to pay if the goods were delivered and return the contract if they were not. This model could be branded, such as “Crumpton Futures,” gaining popularity with large open interest and potentially profiting from transactions.

Conclusion

The essential infrastructure is in place: coded contracts, DeFi exchanges, and cryptocurrencies like USDT and USDC. The key task is to market these solutions to major parties, demonstrating their value and safety. This approach can lead to a successful fintech venture or provide crucial assistance to clients with challenging transactions.

The Case for Decentralized Finance Currency Futures

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