Decentralized finance, or DeFi, first took off around 2018, and is regularly hailed as a technology that breaks apart the traditional stack of financial services, and replaces it with a composable, Lego-like alternative. This is a fair description. But it also obscures the fact DeFi actually unifies many elements of finance, says Arjun Sethi, the co-CEO of Kraken and the featured guest on the newest episode of Fortune’s Crypto Playbook vodcast (available on Spotify, Apple, and YouTube).
In a wide-ranging discussion on Kraken’s latest tokenization efforts, Sethi made the point that banks have historically sought to create walled gardens of financial services—storing assets, selling, lending and so on. They will typically work with favored partners to do this, but the customer has no say over who handles many of the behind-the-scenes transactions.
This changes with DeFi, said Sethi, who pointed out that the technology is a series of open protocols that lets customers control who does what with their assets. These protocols work together seamlessly so, while these tools are decentralized, they also unify the financial stack in an unprecedented way.
“What you are able to do is to defragment what you have across all these traditional financial markets,” said Sethi. “I think that’s the piece that people lose when we talk about decentralized finance.”
