DeFi | why is it the So Demanded - Explained with Facts!

Posted by picasoth on December 22nd, 2020

One of the areas that attract a lot of attention from cryptocurrencies is DeFi or decentralized finance. This applies to financial services that use smart contracts, do not need intermediaries such as a bank or a lawyer, and have automated executable contracts that use online blocking technology.

This has led to a huge increase in the market capitalization of all trademarks used for DeFi smart contracts. It now stands at ,000 million, almost double the figure at the beginning of the month. Within a year, the value of many tokens tripled or quadrupled, and some increased significantly.

Maximum Disruption

DeFi, built mostly on the Ethereum blockchain network, is the next phase of the corrupt financial technology revolution that began with bitcoin 11 years ago. One of the areas in which these decentralized dApps applications have been launched is the trading of cryptocurrencies with decentralized finance at Clever

Other DeFi Services

Borrow and lend cryptocurrencies to earn interest using platforms like Compound or Aave. Pledge the outcome of events using Augur. Create and sell derivatives of real assets such as currencies or precious metals at Synthetix. Participate in a harmless lottery on PoolTogether, where everyone gets their money back and one lucky participant wins all the interest accumulated in the overall pot.

Future Applications

Although most of today’s dApps are in place, future apps can have a big impact on daily life. For example, you can buy land or a house under a mortgage agreement on the DeFi platform, thus paying the price for several years. The acts must be symbolically placed in the block book as collateral, and if you do not pay the fees, the documents will be automatically transferred to the lender. Since no lawyers or banks are required, this can make the whole house buying and selling process cheaper.

Why the Craze?

First, the regulators were behind the curve, and DeFi was able to thrive in that vacuum. For example, in traditional unsecured loans, there is a legal requirement that lenders and borrowers know each other’s identity and assess the lender’s ability to repay the loan. DeFi does not have such requirements. Instead, it’s all about mutual trust and privacy.

Regulators

Regulators need to strike a delicate balance between stopping innovation and not protecting society from risks, such as individuals who put their money in an unregulated area or banks and other financial institutions that cannot make money through potential intermediaries. But accepting change seems more reasonable, and it seems to be happening.

Final Words

One of the last major reasons for the increase in people spending money on DeFi tokens is that it is not left out of its explosive growth. Many tokens are practically worthless or almost worthless, so we see a lot of irrational joy. But whether we like it or not, we are moving to a new financial system that is more liberalized and decentralized than ever before. The key question is how to better manage your progress with a balance that minimizes risks and distributes potential benefits as widely as possible. This will be difficult for the next few years.

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picasoth

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picasoth
Joined: October 17th, 2019
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