DeFi in the world of cryptocurrency
If you’ve ever paid attention, you’ve probably noticed that not a day goes by without mentioning DeFi (also known as decentralized finance).
An innovation with promising potential
Between September 2017 and September 2020, the value of DeFi contracts skyrocketed, from about $ 2 million to nearly $ 10 billion. In 2019 alone, the total cost of DeFi increased by 1,500%.
With the growing number of users (and therefore cash and volume) flocking to DeFi apps on a daily basis, many experts see them as an extremely promising sector that looks set to revolutionize the world of Finance. As a result, the value of most tokens, cryptocurrencies, and stable coins used in DeFi smart contracts has grown significantly and affected crypto trading.
The disappearance of the bubble did its job. Yes, the value of many assets fell sharply, which showed the true value of projects.
Currently, access to technology is no longer the main obstacle to using classic financial services, since most people who are not connected to the banking system have access to the Internet.
Today, the main problem for many is compliance with the requirements of financial institutions: providing adequate identification documents, minimum income or country – specific restrictions-these are what prevent access to financial and banking services, such as current or savings accounts, debit or credit cards, loans, trading services or investment solutions.
Opportunities for innovation
DeFi aims to transform the existing traditional centralized financial system into a new open financial peer-to-peer ecosystem where everyone benefits from various financial services and products without any centralized control or intermediaries. To do this, developers used immutable smart contracts (mainly on the Ethereum blockchain).
The key principles of DeFi for increasing transparency, ensuring financial security, opening up growth opportunities, and developing a new financial system are decentralization, speed, fault tolerance, transparency, immutability, programmability, and compatibility.
Decentralized Finance is the provision of financial services to everyone without any restrictions (if you have an Internet connection). Thus, the ecosystem has launched a variety of protocols, financial instruments, and other “decentralized applications” (decentralized applications) in which crypto assets can be used in more ways than Fiat funds.
Here is a list of where DeFi is used:
- Asset management and savings – Melon, Insta.dapp, Yearn.Finance
- Borrowing and lending – Aave, Compound, Maker
- Data and Analytics – Alethio, Blocs, DeFi Pulse, DeFi explore, DexIndex, DuneAnalytics, MyDeFi
- Decentralized exchanges (DEX) and trading – Bisq, Binance DEX, Curve, Margin DDEX, Fulcrum
- DAO – Aragon, Colonia, DAOStack, DXdao, Daohaus, PieDAO
- Insurance – Etherisc, VouchForMe
- Risk management, KYC procedures and identification – Bloom, identity.com, SelfKey
- Stablecoins – Augmint, DAI, DefiDollar, EOSDT, Gemini Dollar, Paxos Standard, USD Coin
- Staking – Certus One, Dokia Capital, HyperBlocks, Mythos
- Tokenization – OpenFinance, Securitize, Tokensoft
- Wallets – Argent, MetaMask, Gnosis Safe
Today, we are moving towards a new financial order, with a system that will be more decentralized than ever, using new open protocols. Of course, DeFi has become increasingly popular in the cryptocurrency world over the past few years, but their goal is not just to be initiated by crypto. DeFi is for everyone!