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For Finance, Real Democratization Means Being Really Open

For Finance, Real Democratization Means Being Really Open

With Robinhood filing for an Initial Public Offering, we can be sure of a renewed debate about what it means to democratize finance. Robinhood’s combination of zero-commission trading with a slick, intuitive app has been synonymous with the explosion in retail trading volumes: these are estimated to account for 23% of all U.S. equity trading in 2021, more than double their share in 2019.[1]

But since the extraordinary spikes in stock prices driven by Reddit’s r/WallStreetBets group earlier this year, we’ve all learned that the truth is more complicated. Robinhood was able to let its customers trade stocks for free because it sold its order flow to institutional market-makers – and because of its revenues from options trading.[2] And when its volume of trading in stocks like GameStop and AMC soared, Robinhood was forced to restrict buy orders, as well as raise additional capital, to satisfy its collateral obligations to the Depository Trust & Clearing Corp.

For all that they make trading and investment more accessible, online brokers are still part of the Wall Street machine. They concentrate capital flows through large financial institutions that have to spend billions of dollars a year on staff, IT and compliance. Global investment banks’ revenues rose to their highest level in a decade in 2020, according to Coalition Greenwich. The centralization of financial flows works well for them. For most individuals, though, the costs inherent in this system add to their costs and restrict their access to some of the most value-added products.[3]

Another Financial Architecture

Another financial architecture is emerging, though, with the potential to truly democratize finance. Open finance distributes control of, and access to, all users of a system. It uses smart contracts to allow people and institutions to pay, lend, and invest directly with each other. Unnecessary middlemen are eliminated, cutting costs while increasing speed and certainty.

I believe strongly that open finance has the power to deliver huge benefits to financial services users, including lower costs, greater choice, and a fairer system. But these benefits will remain theoretical – and open finance will remain an enthusiasts’ corner – unless it can reach the mainstream.

That’s why it’s critical that this new financial architecture comes to where customers already are – and why we’re bringing the ability to pay, transfer and earn passive income to the users of Over the last nine years, the app has been downloaded 140 million times, with 60 million people using it to navigate 195 countries in 2020. We also know that users – who include pilots, magazine photographers, professional cyclists, aid workers and everyday travelers – are hungry for financial services to be integrated into a platform they already know and love. A recent user survey indicated that roughly half are interested in accessing financial services via the app, while more than 140,000 users have already joined the waiting list for the digital wallet.

Ready for the big time

So apps like can provide the same user-friendly access point to open finance that Robinhood does to traditional finance. But is the underlying architecture of open finance ready for the masses?

The centralized system of brokers, custodians, exchanges and clearinghouses may not be perfect, but it is well established and capable of handling enormous volumes every day. In the past, though, greater adoption of open finance has been held back by the limitations of its own infrastructure. The dominant Ethereum blockchain is too slow and expensive to enable mass adoption: it has been processing around 15 transactions per second in recent months and the average transaction fee moved above $20 in February.[4][5]

Alternatives are emerging, though.’s DeFi / open finance structure is built on the fast, scalable and low-cost Solana blockchain, for example. Solana processes up to 65,000 transactions per second, each costing $0.00001.[6] By comparison, Visa is reported to handle an average of about 4,000 transactions per second, although it has the capacity for 65,000.[7] [8]

With the right user interfaces and processing power in place, then, open finance is ready for the big time. By enabling many to transact with many, it’s ready to host cheaper, faster and more open financial services. In other words, it’s ready to deliver the true democratization of finance.

Alex Grebnev is the co-founder of

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