Decentralized Finance - what is it and why does it matter?

Decentralized Finance – what is it and why does it matter? 

Let’s start with where we are right now and that’s with Centralized Finance. Essentially every way we conduct a transaction is done through some sort of exchange where there is a “middleman”. This exists in banking, lending, trading, investing, and so on. The middleman or exchange maintains control over the system is responsible for security and assures settlement between the interested parties. This is the dominant way that banks, lenders, and brokerage firms operate currently.

Decentralized Finance is a system that aims to use technology (Blockchain and Smart Contracts) to eliminate the middleman or exchange allowing interested parties to interact directly.  An example of “DeFi” would be users lending out crypto currencies like a traditional bank would lend dollars and earn interest as a lender. 

This example is the base case and can grow into any of the traditional areas of centralized finance mentioned above. 

Why should we care? 

DeFi has the potential to reach many more people than Centralized Finance. With only an internet connection users who currently don’t have access to traditional exchanges will be able to trade and transact anywhere and at any time.  With fewer intermediaries, DeFi has the ability lower costs and create additional flexibility. 

DeFi is still only beginning to be adopted but we are going to be hearing a lot more about it in the days and years to come and could be instrumental in reshaping finance as we know it.

As the adoption of DeFi grows I will continue to update you and dive deeper on this topic.

Introduction to Values Based Investing (ESG, SRI and Impact)

One of our primary focuses at Boon Capital is to make sure that your investments align with your goals. We also want to make sure that your investments align with your values.

Values-Based Investing (not to be confused with Value Investing) is exactly what it sounds like. It's looking beyond a company's balance sheet and stock price and considering the economic and social impact a company may have.

There are different approaches to Values-Based Investing that an investor can take and various mutual funds and ETF's that are built to serve these. Here are the primary approaches:


Socially Responsible Investing (SRI)

Socially responsible investing (SRI): This involves avoiding putting money into industries that may have negative environmental or social effects, such as companies that produce tobacco, defense companies, or those that damage the environment.

Environmental, social, and governance investing (ESG):

This refers to making investment choices after considering each company's environmental impact, social impact, and corporate governance structure. Investors may look at executive pay, representation of women and minorities on the board, and a host of other ESG issues.

Impact investing:

This involves investing in companies with the goal of generating beneficial social or environmental change.

If this interests you, we are happy to help identify an approach that suits your needs and implement the proper investment solutions.


Common Causes of Very Bad Decisions - Morgan Housel

Morgan Housel (@morganhousel) does some of the best work regarding the “Psychology of Money,” which happens to be his new book's title. This article is a great reminder of what causes bad decisions at any time, but especially now, given the current environment.

Click on the link below for the full article:

Common Causes of Very Bad Decisions

Oct 1, 2020 by Morgan Housel

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