Spotlighting ReFi LATAM Challenges

Friday, 21st February 2025, I was joined by Tereza Bizkova on the ReFi Weekly to discuss the challenges of ReFi in Latin America. We discussed Latin America's vast biodiversity and the region's unmet potential for ReFi. Here are the key highlights:

Refi has significant potential in Latin America due to its biodiversity and mobile connectivity, but adoption lags behind expectations.

Kickstarting the conversation, Tereza highlighted the immense need for regeneration in Latin America, emphasizing that the continent is the most biodiverse in the world, holding over 50% of global biodiversity in terms of species. She pointed out that this rich biodiversity, combined with widespread mobile phone availability and internet connectivity, creates significant opportunities for innovation. She cited examples from the fintech sector, such as Rappi, one of Colombia’s two unicorn companies, successfully leveraging digital infrastructure to scale its delivery service. This, she argued, demonstrates the potential for technology-driven solutions in the region.

However, despite this potential, she noted that ReFi has yet to gain substantial traction in Latin America. She recalled multiple discussions with Kent from CARBON Copy about structuring content on ReFi in the region. Each time they analyzed different projects, they found that the landscape remained limited, with the same few use cases being highlighted repeatedly. Many projects that made big announcements months or years ago have since gone quiet, leading to some disappointment. Instead of focusing on projects with slow or stagnant progress, she decided to explore the broader challenges preventing ReFi from taking off and identify potential solutions. Through conversations with various stakeholders, particularly guests on the ReFi Podcast, she realized that technology alone is not enough to drive meaningful change.

She emphasized that this challenge is not unique to Latin America. Reflecting on their experiences at DEVCON in Asia, they observed similar frustrations among ReFi builders worldwide. She noted a recurring issue in hackathons, where teams enthusiastically design solutions aimed at supporting farmers without ever consulting actual farmers. This disconnect between technology and the communities it intends to serve, she argued, is a broader issue within the ReFi space. She stressed the importance of bridging this gap to create solutions that are truly impactful and sustainable.

Engaging communities requires understanding their needs and existing tools rather than imposing new technology for its own sake.

In our conversation, Tereza highlighted the importance of understanding real-world conditions rather than assuming that everyone shares the same level of familiarity with certain tools. She pointed out that when working in a niche space, it's easy to fall into a bubble—where using a crypto wallet, navigating an exchange, or paying gas fees feels second nature. However, this isn’t the reality for most people, and stepping outside that bubble to consider the actual experiences, pain points, and technological behaviors of the target audience is crucial.

She gave an example from her own experience in Latin America, where she initially created a Telegram group for a project. However, she quickly realized that adoption was slow because Telegram isn’t widely used in the LATAM community. While she kept the Telegram group, she also started a WhatsApp group—since that's the platform most people in the region prefer. This simple adjustment made engagement much easier.

Her key takeaway from the experience is that approaching people with tools and mechanisms they’re comfortable with is more effective than expecting them to adopt new tools. Onboarding isn’t just about teaching someone how to use a platform; it’s about ensuring they have a reason to use it. If a particular community a ReFi project wants to infiltrate isn’t on Telegram, for instance, there’s little motivation for them to stay active there. Recognizing these behavioral patterns and the effort required for people to switch tools is essential for designing better engagement strategies for ReFi projects.

Challenges include a lack of user engagement, underscoring the need for projects to better integrate communities in development processes.

Tereza emphasized the importance of not just introducing new tools but also ensuring that people fully understand the responsibilities that come with them. She pointed out that, often, when people are asked to create a crypto wallet, the explanation stops at "Go to this website and create a wallet." What’s missing is a deeper discussion about the responsibility of self-custody. Unlike traditional bank accounts, where fraud protections exist and banks can sometimes recover stolen funds, a crypto wallet places full responsibility on the user. Without proper financial education, many people may not be prepared for that level of responsibility—or at the very least, they should have enough information to make an informed decision.

She noted that in the ReFi space, many people who have been deeply involved in the movement for years view crypto and decentralized systems as a natural evolution in how we interact and coordinate. However, when introducing these ideas to a new community, it’s not as simple as saying, "Use a wallet," or "We’re launching a community currency," or "We’ll reward you for the data you collect." It’s not just about handing them a tool or an app, it’s about changing deeply ingrained behaviors and mindsets, which have been shaped over decades or even centuries. That kind of shift doesn’t happen overnight.

A key example Tereza brought up was the wave of carbon marketplaces and tokenized assets that emerged around 2021, with bold claims that NFTs would transform various industries. While the concept may be compelling, the real challenge is adoption. Do people actually see the value in these innovations? And even if they do, is that enough to drive real engagement? She compared this to launching a T-shirt brand—friends might say they love the idea, but that doesn’t guarantee they’ll actually buy the product. Successful adoption requires more than just an interesting concept; it demands real investment from the community.

Tereza pointed out that some projects have made significant efforts in this area. For instance, Shamba Network has done great work in Africa, and in Latin America, EthicHub has been deeply engaged with farmer communities. However, she noted that these projects are exceptions rather than the rule. Many projects attempt to introduce complex token-based incentives for farmers or other underserved communities without addressing the first step—basic onboarding, like creating a wallet. Expecting people to jump from step one to step ten is unrealistic, and without significant investment in education and trust-building, progress will be slow.

Ultimately, she believes that the ReFi space can sometimes be too ambitious with its vision while not doing enough to meet communities where they are. A more sustainable approach would involve co-designing solutions with communities, ensuring they have ownership and buy-in from the start. This shift, she argued, would be a major improvement for the space as a whole.

A holistic approach is necessary to align Web3 technology with economic and social objectives, emphasizing both grassroots and top-down strategies.

Tereza stressed the importance of understanding the existing tools, systems, and behaviors within a community before introducing new solutions. She posed a fundamental question: Do people actually need to have wallets? Will they realistically use them, or is there a more practical way to implement the solution? Instead of assuming that wallets are necessary, she suggested exploring alternative approaches.

For example, she considered whether a designated community member could manage the funds on behalf of others—though she acknowledged that this model might come with its own challenges. Alternatively, she suggested that some communities might not need wallets at all. In such cases, solutions could be designed to integrate with Web2 systems or facilitate payouts through familiar local applications.

Ultimately, she emphasized that the first step should always be understanding the community—how they operate, what they are comfortable with, and what their actual needs and capacities are. Rather than arriving with a predefined solution and imposing a specific flow, it’s essential to meet communities where they are and design accordingly.

Utkarsh Patel, founder of $EARTH who was also on the space reflected on the ongoing challenge of balancing the grand vision of ReFi with the practical steps needed to make meaningful progress today. He acknowledged that while the scope of the problem is vast, the past few years of discussions and content around ReFi have helped shape a shared ideology about what ReFi is and what it should aim for. On the issue of onboarding, he pointed out that ReFi often falls into the trap of trying to onboard the existing crypto ecosystem instead of focusing on those who truly need these solutions.

He emphasized the importance of onboarding the right people—not just crypto-native users, but projects on the ground, facilitators who bridge the gap between protocols and real-world initiatives, and the individuals actively working in these sectors.

Utkarsh also discussed the ongoing struggle to onboard new participants, mentioning efforts at events like COP and climate summits to introduce people to ReFi. However, he stated that successful onboarding requires a clear value proposition—not just enough to get people to sign up but also enough to keep them engaged long-term. Ultimately, he stressed that without substantial onboarding efforts, the space risks remaining an echo chamber.

Sustainable funding models are crucial to tokenize impact and attract broader participation.

When I made an example of how DeFi protocols onboard users through airdrops because they have enough funding to cater for that, Tereza reflected on whether funding alone would make a difference in improving onboarding for ReFi projects. She expressed skepticism, noting that many projects don’t consider onboarding a core part of the user journey. Instead, they believe onboarding often starts after the solution is already built, rather than being integrated from the beginning.

Tereza shared an example of a Celo grant initiative which was intended to support onboarding events. The initiative successfully introduced people to blockchain, helped them create wallets, and sparked initial interest. However, she admitted that if they were to conduct a follow-up analysis three, six, or twelve months later, the retention rate would likely be below 5%. This highlights a broader challenge within the ReFi space that even well-intentioned onboarding efforts often fail to maintain long-term engagement.

Ultimately, she concluded that retention in ReFi is a difficult problem that proper funding can solve by financing a mix of strategic design, user education, and actual use cases for the web3 tools to sustain engagement.

Utkarsh lent his voice to the conversation by stating that ReFi is not yet structured in a way that attracts sustainable funding. While many builders and contributors accept lower pay out of passion for the mission, he pointed out that this is not sustainable in the long run. ReFi needs sustainable financial incentives; otherwise, it will always depend on philanthropy.

He suggested that instead of depending on one-time grants, ReFi should focus on financial models that at least ensure capital preservation. For example, if someone contributes $100, they should have the potential to get back at least $105 over time. This shift, they argued, would unlock a significantly larger pool of capital from funders who are interested but hesitant due to the lack of return mechanisms.

In terms of grant funding, Utkarsh suggested that the best use of limited capital would be to fund the development of 20-30 strong projects focused on ReFi infrastructure systems that would enable better financing and impact verification in the long run. If these projects succeed, they would create momentum, attract more capital, and scale impact naturally. Without this foundational infrastructure, funding individual real-world projects alone won’t lead to systemic change. He also advocated for more structured and dynamic funding mechanisms such as milestone-based disbursements, where grants are released incrementally based on the achievement of predefined milestones.

Today’s edition of the ReFi concluded with reflections on the need for continued experimentation and adaptation of strategies in the ReFi space. There was a shared sentiment that while substantial challenges remain, incremental steps and innovations hold promise for the future of regenerative finance in Latin America and beyond.