DeFi Advocates Unveil $30 Billion Initiative to Combat Global Poverty

DeFi Advocates Unveil $30 Billion Initiative to Combat Global Poverty – Here’s the Details

A growing coalition of advocates for decentralized finance (DeFi) is proposing an innovative plan they believe could alleviate financial strain for low-income households across the globe. This initiative, supported by the DeFi Education Fund (DEF) and various leading crypto policy organizations, suggests that decentralized financial tools could save individuals up to $30 billion annually in fees, which are currently lost to what researchers call the “poverty premium.”

Key Takeaways

A coalition of DeFi advocates is proposing a plan to save low-income households $30 billion a year in financial fees.
Global poverty remains a critical issue, with hundreds of millions living on less than $3 a day.
Many poor households face high financial costs due to a lack of banking access.
DeFi could dramatically reduce expenses related to remittances and transactions.
There is increasing public interest in DeFi services, highlighting frustrations with the traditional banking system.
DEF is intensifying its advocacy efforts in Washington for supportive crypto legislation.

The Ongoing Challenge of High Financial Costs for the Poor

This renewed initiative comes at a critical time, with global poverty levels remaining alarmingly high. In 2025, around 808 million people are expected to live in extreme poverty, surviving on less than $3 daily, based on recent global estimates.

Global poverty statistics

Additionally, an estimated 887 million individuals are classified as living in multidimensional poverty, facing compounding challenges like climate change disasters, political turmoil, and increasing economic instability.

The DeFi Education Fund emphasizes that the traditional financial system contributes to these issues. Their recent research exposed a significant financial cost gap between affluent and low-income households in the U.S.

Cost gap between households

Currently, approximately 5.6 million U.S. households are unbanked, while about 14.2% are underbanked, often relying on expensive financial alternatives. The cost of cashing a paycheck can take up to 5% of its value, and fees can consume an average of 7.1% of annual income for low-income families, in stark contrast to just 0.2% for wealthy households.

The expenses can be overwhelming. The DEF argues that by using decentralized financial systems, it is possible to significantly reduce essential expenses, including remittances and other transaction fees.

One estimate from the proposal suggests that the integration of DeFi infrastructure could lower global remittance costs by as much as 80%, potentially saving unbanked populations around the world $30 billion each year.

Potential savings through DeFi

This initiative coincides with the increasing receptiveness of the American public towards alternative financial solutions. A survey conducted by DEF in collaboration with Ipsos revealed that 42% of Americans would likely consider using DeFi services if new legislation clarifying crypto privacy protections is implemented.

Many survey respondents expressed frustration with banking delays, hidden fees, and challenges accessing their funds. Notably, over half of the adults surveyed stated they desire full control over their finances and personal financial data.

Expanding DeFi’s Influence and Advocacy Efforts

In addition to its economic arguments, the DeFi Education Fund is amplifying its policy initiatives in Washington, D.C. In August, DEF established the DeFi Education Foundation, a non-profit focused on expanding its advocacy and fostering deeper connections with lawmakers.

At the same time, DEF, along with prominent venture capital firm Andreessen Horowitz (a16z), is urging the U.S. Securities and Exchange Commission (SEC) to introduce a regulatory “safe harbor” for blockchain applications. They are advocating that neutral software interfaces should not be categorized as brokers, as current interpretations could inadvertently push developers into regulatory roles that stifle innovation.

DEF has also submitted an official response to the Senate Banking Committee regarding the draft Responsible Financial Innovation Act of 2025. The organization and several major crypto firms, such as Paradigm and the Uniswap Foundation, call for clear regulatory distinctions between software developers and financial intermediaries.

While the debate surrounding DeFi's long-term advantages continues, advocates highlight practical instances where digital tools are enhancing access to financial services.

DeFi usage in conflict zones

In various regions of Nigeria and East Africa, crypto-based platforms enable users to engage in financial transactions without needing smartphones. Furthermore, in countries plagued by conflict or hyperinflation—such as Venezuela, Zimbabwe, and Argentina—digital currencies are increasingly utilized to facilitate money transfers and preserve savings.

Some humanitarian organizations have begun implementing blockchain systems for aid distribution, ensuring greater transparency.

However, researchers have noted that DeFi still faces significant obstacles. Challenges such as collateral-heavy lending models, unstable token markets, smart contract vulnerabilities, and the need for better financial literacy have hindered widespread adoption.

Currently, much of the activity in the DeFi space is centered on speculative trading rather than substantial economic applications. Even in El Salvador, where Bitcoin was adopted as legal tender in 2021, daily usage has fallen short of expectations.

DEF maintains that policymakers should safeguard the elements of DeFi that directly benefit consumers by reducing costs. The organization is convinced that ensuring open access, affordable transactions, and user control is vital for reaching those on the financial brink.