Why You Don't Need On-Ramps in DeFi

Sadly, there are many legal obstacles and tax obligations that can make trading between crypto and fiat currencies feel like a burden.

But what if DeFi has eclipsed the need for these processes?

If what you want is to get the most value from your crypto portfolio, there are many ways to do it without relying on fiat trades.

That’s thanks to DeFi making crypto more stable, useful, secure, and accessible.

Let’s put it this way:

• If you could buy anything with crypto…
• If crypto stablecoins were more stable than fiat currencies…
• And you had absolute control of your coins…

…why would you ever need to switch?

So how essential are ramps to DeFi in 2024? Let’s find out.

Quick Takes:

• Because fiat is regulated, crypto on/off ramps involve regulated exchanges, KYC verification, and custodial wallets.
• DeFi may not need ramps because the buying power of crypto is catching up with traditional money. Holders can buy more things and find more people to exchange with directly.
• DeFi brings new features, and is creating a digital economy (similar to online businesses) that’s no longer limited to coin investing.
• Spending your coins, rather than selling them for fiat, can mean avoiding a taxable event in many jurisdictions.

What Is a Crypto On/Off Ramp?

“Ramps” are payment gateways that allow crypto and fiat currencies to interact with each other. 

Crypto on-ramps and off-ramps have existed for as long as the first bitcoin exchanges. 

They allow people to buy and sell BTC directly with fiat currencies like dollars and euros.

Crypto-fiat ramps are typically custodial, meaning that you have to verify your identity, open an account, and trust your coins to a company. Once you do so, you can withdraw or buy crypto via credit cards and your traditional bank account.

But relying on these centralized exchanges comes with a litany of problems, ranging from a lack of financial autonomy to a lack of security.

Fortunately, these ramps are becoming less necessary with every passing year.

4 Reasons Why DeFi Doesn’t Rely on Ramps Anymore

If you’re wondering which crypto-to-fiat exchange is the “least bad” way to unlock the value of your crypto, here’s an easier solution: don’t rely on them. 

Thanks to DeFi, you can unlock the value of your coins without dealing with the consequences that come with cashing out to fiat.

Here are four reasons why.

#1 - More And More Businesses Accept Crypto Payments

The value of money is both financial and economical. The former relates to the supply and demand of currency, while the latter is about what you exchange it for: goods and services.

This is known as your purchasing power.

Whether you bought bitcoin in 2011 or 2020, you have more buying power in 2024 than you did just a few years ago. That’s because more companies accept crypto as a payment method today. 

This includes both blockchain businesses and local stores, and the number of businesses that accept crypto is likely to keep growing.

#2 - Crypto Adoption Makes Peer-to-Peer Exchanging More Common

If you chose a random person on the street, how likely are they to carry cash? What about smartphones? What about crypto?

Generally, cash is so common that you can walk into any store and ask for change. But how long will it be before most businesses accept crypto to the same extent?

It could actually be sooner than you think.

Smartphones are a perfect example of technology adoption. They’ve existed since the 2000s, and became more affordable after the launch of the iPhone in 2007. They became faster with 4G networks in 2009. By 2015, smartphones were everywhere. 

Crypto adoption is on a similar trajectory, but it actually has a leg up: it can leverage the existing widespread adoption of the internet.

#3 - DeFi Doesn’t Rely on Fiat to Create Value

Instead of cashing out from DeFi wallets, which is a process that would require off-ramps, people are finding new ways to use their coins.

In other words, crypto has become more than just an investment. It can also be used to buy digital goods and services like:

• Digital domains.
• Web tools.
• Collectibles.
• Ownership rights.
• In-game items.
• Event tickets.
• Good and services.
• Assets.

#4 - Sticking with crypto can lower your tax obligations

Did you know that, in many parts of the world, crypto holders only have to pay tax when they swap between crypto and fiat?

In other words, avoiding off-ramps can mean saving big on your taxes.

Thanks to the arrival of stablecoins, there are many ways to hold crypto while still shielding yourself from price volatility. 

This lessens the need for swapping from DeFi to TradFi, and can even present financial incentives to stick with crypto.

Accessing the Benefits of TradFi With New DeFi Projects

Liquid Loans is a decentralized protocol that lets you unlock the best parts of TradFi without all of the drawbacks. 

It gives access to 0% interest-free loans on a timeless repayment schedule.

The protocol also lets you mint a true DeFi stablecoin called USDL.

USDL can be held, spent, traded, and invested in the same ways that you would use fiat currencies like dollars and euros. 

Since USDL is algorithmically tied to the price of the US dollar, you also don’t have to worry about price volatility.

This is a perfect example of how, in 2024, DeFi is relying on ramps less than ever.
To learn more about how you can unlock the full value of your crypto, head to the Liquid Loans Dapp.