TL;DR | ShopFi = DeFi + Shopify?

NOTE: This is the TL;DR of my longer article that deep-dives this topic, and presents all of the background information that influences these decisions. If you have time, please check it out here!

Inspired by Tobi's tweet:

I thought this would be a great chance to deep dive Shopify's product and share my own strong, but loosely held opinions about their opportunities in a fast growing space i'm passionate about.

Disclaimer:
I don't represent Shopify in any way, and all of my opinions are my own.

I am a product manager and a technology enthusiast. While I have conducted my own research, I am not an economics, ecommerce, or financial subject matter expert. If you notice any factually incorrect details, please let me know so I can correct my understanding.

Lastly, I am not a financial advisor, and none of my content should be considered advice.

Top Opportunities

  1. Globally inclusive payment system

DeFi provides anyone with an internet connected device access to financial markets and a global payment rail. Supporting crypto payments could connect anyone around the world in a cheaper, faster network that includes the unbanked.

  • International peer-to-peer commercial transactions.
  • eWallets as an embedded functionality in commercial platforms.
  • Merchants accepting crypto and getting paid in the currency of their choice.

2. Yield generation for everyone

Wealth generation isn't only for middle and upper class Americans anymore. Anyone around the world can participate in yield generating financial activities; potentially integrated in commerce platforms, empowering and encouraging users to transact with each other.

  • High interest savings accounts for eWallets.
  • Collateralized stablecoin or stake-to-purchase options for buyers.
  • Alternative sources of capital and income for merchants.

3. DAOs, micro-economies and new business models

DAOs present new ways for merchants to access capital, and can include buyers as co-owners. Yes – ShopFi could enable you to make more money than you spend at a store, by giving you a form of ownership. These governance structures are being piloted in other industries.

  • Decentralized business ownership and payment structures
  • NFT tokenized product sales
  • Transparent supply chains
  • Loyalty and tokenized incentive programs for ecosystem participation

Shopify's Role

I believe Shopify should be investing in activities that support decentralized finance. Their mission – making commerce better for all – has always been rooted around creating opportunity for entrepreneurship. This involves how people spend their money. Commerce isn't only about retailers.

While DeFi may challenge existing business models or revenue streams, new income generating activities are enabled. The technology offered by DeFi is too enticing to simply watch from the sidelines. I'll be the first to say – the entire cryptocurrency space is risky – but that shouldn't prevent small asymmetric bets from being placed to support the overall mission.

DeFi also creates unique opportunities that support global commerce and developing nations. Many of the largest growing participants of commerce are from these segments. Many who conduct cross-border business frequently. Many who's national currency is pushing them into poverty. The rest of the world can help with this growth, if you help make it easy.

By aligning revenue streams with overall commercial growth, including decentralized finance, Shopify can continue to position themselves as partners to all market participants – no matter how large or small.

Recommendations

  1. Decide on the level of involvement Shopify wants to have on the Payments side. As Shopify Payments becomes an increasing percentage of revenue, is it in Shopify's best interest to compete with the likes of Paypal, or even Coinbase Commerce?  Perhaps they can also reduce their dependence on Stripe or other providers, who may eat Shopify's lunch. I very much see a squeeze on storefront platforms on either side, from payment providers and social media. Commerce is quickly moving to more than just retail products.
  2. Actively support the adoption of safe crypto assets. It aligns with the overall mission and promotes inclusion for global audiences. It's great that Shopify is working with partners to allow cryptocurrencies as payments, but I would like to see more active engagement in the coming months. Would Shopify consider adding eWallet functionality to the Shop App? Shopify could be a huge contributor for the space by making it easier to pay, and get paid with crypto.
  3. Invest in small research and development initiatives that experiment using blockchain technology. Uncover new ways to add value to merchants. Keep the entrepreneurial hat on as you continue to grow into a public behemoth. Now is the time to be building up internal skills, as demand rises for this new technology.
Stay tuned... in the coming weeks I can put together a mock up of a simple Shopify DeFi application.

Curious to read the long version? Check it out here.