DeFi: Can decentralized finance defy China’s crypto controls?

October 28, 2021 Blockchain Industry Updates

Every morning, for two years, Madao rode the metro to a bustling artery of downtown San Francisco for his coding job at Flexport, a freight-shipping logistics startup. Like many bright young coders in the Bay Area, the 27-year-old worked by day and bought bitcoin by night. Then one day, a friend invited him to join a WeChat group that was building an app in a new technology sector called “decentralized finance” — DeFi for short. The app allowed users to borrow and lend their cryptocurrencies with interest like a traditional bank, but without the need for a centralized service.

“That was the great thing about DeFi,” said Madao, who asked not to be identified by his real name. “Any programmer could learn how to make a [DeFi] app in a few weeks.”

The DeFi world is made up of hundreds of such apps, called protocols, built atop blockchains, which facilitate the movement of billions of dollars in cryptocurrency transactions a day. Skilled programmers who contribute to its development can make millions in cryptocurrency tokens and transaction fees. “For my first app, the amount of capital flow reached $100 million,” Madao told me. “It only took me three days to make that.” He was hooked.

Madao now runs his own DeFi app called YFII out of Shenzhen. Already a multimillionaire (by his own account), he is one of many Chinese with finance or tech experience who have moved back to China to pursue a career in the DeFi sector. “I know a few Chinese who work a day job, then run a multibillion-dollar protocol at night,” he told me.