Traditional finance has made a move for decentralized finance to run.
April 8, 2021
4 minutes of reading
Comments expressed by Businessmen the contributors are their own.
Decentralization finance (DeFi) has experienced an unrealistic surge unlike the one in the wake of collapsing global economies in the 2020s.
Last year’s warmer months are now known as the “DeFi Summer” because the total value locked up in their smart contracts has grown rapidly, from a few hundred million to over $ 20 billion in just a few months.
Decentralized finance, as the name implies, operates independently while not relying on traditional intermediaries such as banks and insurance funds. The need for these intermediaries will be eliminated, thanks to users’ ability to invest, transact, transfer and execute peer-to-peer transactions using cryptocurrencies along with digital assets.
Ethereum launched in 2015 and quickly started attracting developers looking to build all kinds of decentralized applications, from financial applications to games (such as viral CryptoKitties).
Fast-forward to 2017, when ICOs on Ethereum gained in popularity. This accommodation is digital moneyGlobal applications and payments have led to some of the most notable DeFi projects of the ICO era. It is from this point on that it is clear that the public has become warmer with DeFi. Billionaire businessman Compare Mark Cuban the development of DeFi until its early days Internet:
“You are starting to see the NFT (irreplaceable token), and it’s not so much in terms of volume, market value, it’s just that people are becoming more comfortable with it and so we are. Beginning to see these apps appear only left and right. It reminds me a lot about the early days of the Internet, where in the mid-90s people started talking about internet applications, but the internet is ten years old.
Cuban is a believer in the power and potential of DeFi, especially considering the new all-time highs of the token price achieved by Ethereum and so-called “killer Ethereum” protocols like Polkadot and Solana.
Of course, DeFi isn’t just about the prices of the native cryptocurrencies of the platforms. For example, TrustToken recently launched the TrueFi protocol for decentralized on-chain lending on Binance. Essentially, the protocol allows people to borrow money without locking their cryptocurrency as collateral, which Ethereum requires. TrueFi takes the idea of decentralized lending, existing off-blockchain as a short-term, high-interest “text loan” and improves it through DeFi mechanisms, with transparency as a key ingredient. in providing.
Borrowing and lending is just one of the many possibilities for conversion by DeFi. The development of irreplaceable tokens (NFT), opening the door for people to invest in traditional irreplaceable assets such as real estate and art, also represents a growth. promises in space and is growing in popularity. Cuban is a huge fan of this particular DeFi segment.
There is more in store
There are a number of reasons behind the DeFi craze, apart from the elimination of regulators. Another reason is that major asset managers and street financial institutions are participating, as they are beginning to accept DeFi and seek to participate. Then there’s also the classic FOMO case – people don’t want to be left out of this explosive development, especially considering all that the future might have for it.
DeFi developers are constantly building new innovative projects and exploring ways to engage new users. Developers are also uncovering new use cases that were previously difficult to touch due to high network fees. The encryption of new, more traditional assets will also create new and exciting opportunities.
Its recent boom has only paved the way for even greater, untapped potential.