The Origins of Decentralized Finance

The Evolution of Money in CeFi

Even though there are a lot of limitations in Centralized Finance; CeFi has evolved through centuries, and it has improved along the way. The first form of trading in human history has taken place by barter or peer to peer exchange of goods which was inefficient due to the exact matching of the supply and demand.

The initial form of money was introduced as a solution. Stones or shells were used as medium of exchange, unit of account and store of value. The next stage was the coinage era which started in 600 BCE in Lydia. People started to use coins as a tangible store of value, and it came with stability, uniformity, portability and durability.

The first bank note originated in China in the 13th century and found its way into Europe. Some years after that, the banks were ready to offer the non-collateralized fiat money. non-physical transfer of money started in 1871 by western union and this function has improved by introducing credit cards, ATMs, telephone & internet banking, and Apple pay which is the latest form of transaction conduction.

The origins of DeFi

The emergence of Bitcoin was not the beginning of the Digital currencies; the real origin of Decentralized Finance goes back to 1991 when Haber and Stornetta published the article “How to time-Stamp a digital document”. They proposed a concept in which transactions were signed at a certain time. They implemented a Merkle Tree or Hash tree to store multiple transactions.

After Haber’s research, more cryptographers started working on the idea and multiple articles were published in the next 10 years.

In 1993 David Chaum started eCash; a digital, safe, anonymous payment system which went bankrupt in 1998. The world was somehow not ready for this huge paradigm shift and the online shoppers preferred convenience to security.

“The Eternity Service” article was published in 1996 by Ross Anderson about a decentralized storage system in which no updates could be deleted. The goal of this research was to provide more secure peer to peer networks.

Scheier and Kelsey were two other professionals who contributed to the DeFi world by writing a paper about a method to secure logs from untrusted machines using cryptography.

In 2002 Mazieres and Shasha proposed a network file system which was based on decentralized trust. In the same year an article was published by Beck with the title “Hashcash — a Denial of service counter Measure”.

It was in 2008 when the paradigm shift accelerated, and things started to get serious. an unknown person or group, referred to as Satoshi Nakamoto published an article to introduce a protocol for a new electronic cash system. Satoshi’s protocol used distributed computations by many computers around the world, all working on the same problem.

There were no third parties to check the rules and all the regulations were supposed to be on the blockchain. Although, the word “Blockchain” has never been mentioned in the article. The words “Block” and “Chain” were used separately to explain how transactions Datas on the blocks are connected on a chain. The Bitcoin Network started in 2009 when Nakamoto mined the genesis block (Block number 0) of Bitcoin.

Bitcoin and Ethereum paved the path for the foundation of the Decentralized applications. Ethereum with the native token ETH is the second largest cryptocurrency in the world and its market cap is $230 billion. It was introduced by Buterin in 2014 and it’s more like an extension of Bitcoin’s applications. We can have smart contracts on Ethereum. Imagine a money Lego which can be formed the way you want at the expected time. Developers can program the money using smart contracts. Moreover, it’s a ledger to keep all the transactions which are happening.

Decentralized applications are considered the second generation of blockchain technology. All the computer applications which run on a distributed computing system are considered dApp. The more people join the decentralized financial world and the more Defi products get combined, the faster the dApps industry will grow. With the use of dApps we will not need a central clearing house for app interactions, and everything will happen on transparent smart contracts.

DeFi Evolution

The ecosystem of Decentralized Finance has been evolving ever since. Inefficiencies of the market is getting recognized and new DeFi projects are showing up to accelerate the path towards financial freedom.

There has been so many advances and the mass population’s reactions are improving in comparison to the former years. However, we are still scratching the surface of this amazing technology and so much is still needed to be built by the DeFi Community of the entire world.

Paycer is glad to contribute to the decentralized financial world by preparing the needed infrastructure and a simplified platform. Every DeFi company and every single developer in the blockchain industry is bringing the economy one step further at a time and the mass adoption will happen sooner than what you think.

About Paycer
Paycer’s goal is to aggregate DeFi investments multi-chain and make them available to users without the need for their own wallet nor the expertise. This should allow anyone to generate a passive income in a world where banks no longer pay interest. Hence the Paycer team is developing a bridge protocol for DeFi and TradFi to combine the best of both worlds and make it available for retail clients #CeDeFi. Apart from the technical matters and the creation of a super easy to use final product. The goal is also to create a regulatory framework that allows the legal operation of a DeFi platform within the EU first and subsequently in other regions.

Currently, a DeFi platform is already available on on which Paycer tokens PCR can be claimed and staked. More features will go live soon. At the moment on Polygon but other blockchains will be integrated in the near future. Paycer is also working on a banking partnership to be able to combine DeFi with a traditional bank account. In addition to the development of the DeFi platform, the development of the final consumer product is also in progress.

Be sure to follow Paycer on social media for all the latest updates on product development. We have further exciting announcements to share very soon.

Stay in touch with Paycer:
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Source: Santoro, Joey, et al. DeFi and the Future of Finance. Wiley, 2021.



Paycer is a bridge protocol that aggregates DeFi services cross-chain and combines them with traditional banking services.

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Paycer Protocol

Paycer is a bridge protocol that aggregates DeFi services cross-chain and combines them with traditional banking services.