Challenges of Present TradFi and DeFi

Access to funding has never been more crucial for the survival of businesses due to the lending-based global economy we find ourselves in.

Unmet Financing Needs in Emerging Markets (EM)

Significant Funding Gap

• 41% of businesses in emerging markets face unmet financing needs due to the limitations of traditional finance (TradFi).

• A staggering $5 trillion funding gap restricts economic potential, representing 130% more than the funding currently available.

Lost Opportunities

• The inaccessibility of capital leads to billions of dollars in missed opportunities for businesses, stifling innovation and growth in these regions.

Democratizing Investment Access

• Spice Protocol makes high-yield investment opportunities—once reserved for large institutional players—accessible to a global base of Web3 investors.

• Through tokenization and DeFi vaults, users can participate in diversified, high-yield investments without the traditional barriers of minimum capital requirements or geographic restrictions.

DeFi’s Closed Yield Loop

Circular Yields in DeFi

• DeFi primarily generates returns from activities like lending, borrowing, staking, and liquidity provision on-chain, relying on user participation rather than real-world economic activity.

• This closed-loop system recycles existing capital, often resulting in volatile yields highly sensitive to crypto market fluctuations.

Lack of Real-World Integration

• Without incorporating real-world assets (RWAs) or external revenue sources, DeFi fails to tap into genuine, scalable growth opportunities.

• The absence of real economic value inflows leads to unsustainable APYs and limits DeFi’s potential for long-term stability.

An X post by Vitalik Buterin talking about where current DeFi yield comes from