DeFi advocates propose a $30 billion global poverty alleviation plan, reshaping a new paradigm of financial inclusion.

In November 2025, the DeFi Education Fund, in collaboration with several encryption policy organizations, released an innovative proposal aimed at saving approximately $30 billion in expenses for low-income families worldwide each year through decentralized finance technology. The plan pointed out that the high costs of current financial intermediary institutions result in an average annual income loss of 7.1% for impoverished families, while DeFi technology can reduce global remittance costs by up to 80% by eliminating intermediaries.

At the time of this initiative's release, the number of people living in extreme poverty worldwide still stands at 808 million, with another 887 million facing multidimensional poverty pressures. A survey by DEF shows that 42% of American consumers are willing to try DeFi services under a clear regulatory framework.

The Current State of Global Poverty and the Dilemmas of the Financial System

According to the updated global poverty data for 2025, approximately 808 million people still live in extreme poverty on less than $3 a day. Although this number has decreased compared to previous years, the pace of progress has not yet met the sustainable development goals set by the international community. Meanwhile, there are still 887 million people living in multidimensional poverty, facing not only income insufficiency but also multiple pressures from climate disasters, political turmoil, and economic vulnerability. In this complex context, the high-cost structure of traditional financial systems further exacerbates the economic burden on vulnerable groups.

Financial inclusion data within the United States reveals a more specific dilemma. Research by the DEF shows that approximately 5.6 million households nationwide have no bank accounts at all, and an additional 14.2% of households are underbanked, forced to rely on expensive alternative financial services. The specific cost comparison is shocking: low-income households can pay fees of up to 5% of the face value to cash checks, while the average costs of various financial services account for 7.1% of their annual income, compared to only 0.2% for affluent families. This systemic cost disparity creates what researchers call a “poverty premium,” where impoverished individuals pay a relatively higher cost for basic financial services compared to wealthier groups.

From a global perspective, the issue of remittance costs is particularly prominent. According to data from the World Bank, the global average remittance cost still hovers around 6%, far above the United Nations' sustainable development goal of less than 3%. The proposal from DEF cites estimates indicating that DeFi infrastructure has the potential to reduce global remittance costs by up to 80%, which means it could save approximately $30 billion annually for the global unbanked population. This figure is equivalent to about 20% of the total global official development assistance funds, demonstrating the potential social impact of DeFi technology.

Technical Principles and Implementation Path of DeFi Solutions

The core mechanism by which DeFi technology reduces financial costs lies in its decentralized characteristics, which significantly reduce transaction links and related fees by eliminating traditional financial intermediaries. Analyzing from a technical architecture perspective, DeFi protocols automatically execute transaction rules based on smart contracts, replacing the manual processing of review, clearing, and settlement processes that are needed in traditional financial institutions. For example, in cross-border remittance, the traditional model requires multiple steps involving the remitting bank, intermediary banks, and the receiving bank, with each step incurring fees and time delays. In contrast, DeFi solutions can achieve point-to-point direct transmission through blockchain networks, shortening a traditional process that takes 3-5 days to just a few minutes, thus reducing costs by more than half.

In terms of specific implementation paths, the DEF proposal suggests advancing the inclusive financial application of DeFi from three levels: the basic protocol layer focuses on the scalability of the underlying blockchain and optimization of transaction costs, ensuring that the network can handle large-scale microtransactions; the application layer is dedicated to developing user-friendly front-end interfaces to lower the technical usage threshold; and the policy layer promotes the establishment of a clear regulatory framework to provide compliant development space for innovation. This multi-level advancement strategy aims to address the technical bottlenecks and regulatory uncertainties currently faced by DeFi, clearing obstacles for large-scale application.

In real-world application cases, practices in Nigeria and the East African region provide valuable references. Although the mobile payment systems in these areas are relatively developed, they are still exploring the integration of DeFi protocols to further drop costs. Specific cases show that blockchain-based payment networks allow users to complete transactions using feature phones, enabling them to enjoy the convenience of digital currency without the need for smartphones. In regions facing hyperinflation or political turmoil, such as Venezuela, Zimbabwe, and Argentina, digital currency has become an important tool for protecting savings and transferring value, and some humanitarian organizations have also begun to adopt blockchain systems to distribute aid, improving transparency and efficiency.

Key Data of the DeFi Poverty Alleviation Program

Extreme poverty population: 808 million (daily living expenses below 3 dollars)

Multidimensional poverty population: 887 million

Unbanked American households: 5.6 million

The financial cost ratio for low-income households: 7.1% of annual income.

Proportion of financial costs for wealthy families: 0.2% of annual income.

Potential savings amount in DeFi: $30 billion per year

Global remittance costs drop by up to 80%

U.S. Consumer DeFi Acceptance: 42% Willing to Try Under Clear Regulation

Advocacy and Regulatory Progress of DeFi Policy

As the role of Decentralized Finance (DeFi) in the real economy becomes increasingly prominent, the DeFi Education Fund has strengthened its policy advocacy efforts in Washington. In August 2025, the organization officially established the DeFi Education Foundation, a non-profit entity aimed at expanding its advocacy reach and deepening interactions with legislators. This institutional initiative marks a significant shift for the DeFi industry from technological exploration to policy participation, providing organizational support for the industry to seek a more favorable regulatory environment.

In terms of specific policy recommendations, DEF, in collaboration with Andreessen Horowitz, submitted a request to the U.S. Securities and Exchange Commission to create a regulatory “safe harbor” for blockchain applications. The core argument of this proposal is that neutral software interfaces should not be classified as intermediaries, as existing regulatory interpretations may force developers to assume unintended regulatory roles, thereby stifling innovation. Meanwhile, DEF also submitted a formal response to the Senate Banking Committee regarding the draft of the “2025 Responsible Financial Innovation Act,” in which DEF, along with major crypto companies such as Paradigm, Jump Crypto, Multicoin Capital, Solana Policy Institute, and Uniswap Foundation, jointly called for a clear distinction between the regulatory responsibilities of software builders and financial intermediaries.

These policy efforts come at a critical time, as American consumers are showing an openness to alternative financial solutions. A survey conducted by DEF in collaboration with Ipsos reveals that 56% of American adults want complete control over their funds, and 54% of respondents want to manage their financial data. Consumers' main dissatisfaction with banking services centers on practical issues such as processing delays, unexpected fees, and difficulties accessing funds. These pain points correspond perfectly to the advantages of DeFi technology, providing a public opinion basis for policy advocacy.

Technical Limitations and Real-World Challenges

Although DeFi theoretically holds the promise of reducing barriers to financial inclusion, there are currently several technical and developmental limitations that hinder its widespread application in inclusive finance. The over-collateralization loan model is a primary obstacle, as this requirement effectively excludes low-income groups who are most in need of financial services due to their lack of sufficient collateral. The extreme volatility of token markets also limits the practicality of DeFi as a store of value and medium of payment, particularly in budget-constrained impoverished households, where asset preservation is a fundamental need.

Smart contract security vulnerabilities pose another challenge. In the first half of 2025, losses from exploits of DeFi protocols exceeded $300 million, and this security risk is particularly deadly for vulnerable groups with lower risk tolerance. The threshold of financial knowledge is also significant; DeFi applications require users to have a basic understanding of complex concepts such as private key management, gas fees, and protocol interactions, which is often lacking in financially vulnerable groups. These factors collectively lead to the current DeFi activities still being primarily focused on speculative trading rather than real-world economic use.

The case of El Salvador provides valuable real-world references. Although the country designated Bitcoin as legal tender in 2021, the daily usage rate remains lower than expected. Analysts point out that insufficient technological infrastructure, price volatility, and complex user experience are major hindering factors. These experiences indicate that for DeFi to truly serve global poverty alleviation goals, more efforts are needed in technological stability, user education, and localization adaptation; mere technological superiority is insufficient for widespread adoption.

Future Development Directions and Strategic Recommendations

Based on the opportunities and challenges of current DeFi development, DEF has proposed targeted promotion strategies. The short-term focus should be on regulatory clarification and optimization of fundamental protocols, particularly to drop transaction costs and enhance network throughput, enabling it to support high-frequency small transactions. Mid-term goals include developing credit assessment models that are more suitable for inclusive finance scenarios, reducing reliance on over-collateralization, and creating more intuitive user interfaces to lower the technical usage threshold. The long-term vision is to establish a fully open and interoperable financial infrastructure, allowing everyone to access basic financial services at nearly zero cost.

From the implementation strategy perspective, it is recommended to prioritize a few representative pilot areas, collaborating with local financial institutions and humanitarian organizations to conduct targeted testing of Decentralized Finance solutions. These pilots should focus on specific use cases such as agricultural supply chain financing, cross-border labor remittances, and micro-enterprise lending, demonstrating the practical value of Decentralized Finance through measurable outcomes. At the same time, strengthening dialogue and cooperation with traditional financial institutions is also crucial, as many traditional banks are exploring the application of blockchain technology, and collaborating with these institutions can accelerate the compliance and mainstreaming process of Decentralized Finance solutions.

DEF emphasizes that policymakers should protect the core feature of DeFi that directly drops consumer costs, ensuring that regulation does not inadvertently stifle these innovative values. Open access, low-cost settlement, and user control should become the fundamental framework for evaluating DeFi policies, as these features are crucial for serving populations living on the financial margins. As relevant technologies mature and the regulatory environment evolves, DeFi is expected to become an important component of the global poverty alleviation toolbox by 2030.

As $30 billion in digital assets moves from theoretical models to practical planning, DeFi is no longer just a game for financial elites, but begins to showcase its inclusive nature. This technology-driven financial revolution is attempting to establish new connections in corners that traditional systems have failed to reach, and its ultimate test will be how to translate innovations in the digital world into tangible savings for families in poverty.

FAQ

What is “poverty premium”?

The poverty premium refers to the phenomenon where low-income groups pay a relatively higher cost for basic financial services compared to wealthy groups, including a higher proportion of remittance fees, check cashing fees, etc., resulting in an unfair economic burden.

How does DeFi drop remittance costs?

Decentralized Finance enables peer-to-peer direct transfers through blockchain technology, eliminating multiple intermediary steps in traditional cross-border remittances, reducing the average cost from 6% to about 1.2%, while shortening the processing time from several days to just a few minutes.

What are the main obstacles facing the DeFi poverty alleviation program ###?

Including multiple challenges such as high technical barriers, significant price volatility, unclear regulations, security risks of smart contracts, and the lack of credit models suitable for low-income groups, systematic solutions are needed.

How can regular users start using Decentralized Finance services?

It is recommended to start with mainstream DeFi protocols, using small amounts to familiarize yourself with the operation process, focusing on learning private key management, gas fee control, and the basics of smart contract interaction, while closely monitoring regulatory developments.

Can DeFi completely replace traditional banks?

In the foreseeable future, DeFi is more likely to coexist and complement traditional banking systems, each playing to its strengths, with banks providing compliant frameworks and insurance protection, while DeFi offers lower costs and innovative services.