Decentralized finance (DeFi) is the idea of rebuilding the infrastructure of financial services and moving it onto decentralized networks to take the industry from a centralized system full of monopolies towards a trustless and transparent world that runs with no intermediaries.
At present, it mainly exists in the Ethereum blockchain. DeFi decentralized applications have mainly focused on providing the same financial services but on a trustless network. The reach of this new breed of applications is borderless and enables anyone from any part of the planet using an internet connection to gain entry into a new market full of financial services for every need.
Some of the most common uses are lending, trade of digital as well as physical assets, investments in traditional and synthetic products, and payments through a network of decentralized actors with no central authority. As time progresses, these services will begin to compete with the traditional world and replace it.
Despite all of the recent troubles in the world, DeFi has undergone substantial growth, pushing the total valuation of the space to $1 billion. This is measured by the number of tokens currently locked using DeFi smart contracts.
This growth could not be at a weirder time. A pandemic has swept the world and forced the economy into a shutdown, casting uncertainty towards what remains of 2020. Despite the circumstances, or perhaps because of them, DeFi is experiencing continuous growth.
The world of decentralized finance keeps being populated by new projects from teams across the globe. This article aims to be a short overview of the most interesting ones. They are at the front of the new economy and, if anything, they’ll use this crisis as the launchpad to a more open and transparent economy.
This is a network that offers on-chain liquidity aiming to connect projects for the tokenized economy. The Kyber Network is platform-agnostic, allowing fast inter-token transactions, token swaps between different protocols, and complete platform interaction for developers looking to use their infrastructure. Kyber encourages tokens to be listed on their trading services and has a depositary service which allows users to gain profit by exploiting spreads between assets.
An open trading platform for crypto-assets and other trading services. It is a trustless trade service with minimum risk from a counterparty. It is non-custodial, so the user keeps control over the assets. It has an ample pool of liquid since it aggregates spot and lending resources, pulling them across different exchanges. It offers margin trading with leverage that goes as high as 4x. A long list of coins and tokens can be used for collateral. The platform provides instant access with no sign-up. It uses the Ethereum Blockchain for smart contracts and security.
The platform markets itself as “a trustless smart wallet for decentralized finance.” This built to allow the DeFi market to manage, make potions, and deploy assets on different protocols to make the best possible gains.
InstaDApp is a user-focused platform that aims to bring together protocols such as Uniswap, maker, Compound, and many others listed and to be added. A friendly bridge for those looking to start in DeFi. As of the writing of this article, the protocol has $80.7 million in smart contracts.
The new open finance platform on the Ethereum network opening the way to lenders, borrowers, and traders looking to start in the DeFi world. All those looking to earn interest from their Ether are able to lock it in bZx, which is then used to offer borrowers competitive rates. The platform has lower operational costs than its centralized counterparts, making it accessible for all sizes of margin traders. The platform has secured an excess of $12 million on its smart contracts.
A decentralized non-custodial platform which aims to give users the ability to swap between tokens without having to go through a centralized service. The digital assets offered are locked in Ethereum smart contracts for more transparency. Smart Tokens are a service offered by Bancor to increase liquidity in the market and benefit traders. It has accrued over $11 million in crypto assets.
A gateway to decentralized finance, powering investing in the DeFi space by individuals and companies. Their main market presence is in developing nations with low financial infrastructure. The objective of the protocol is to bring a modern financial service industry to these countries and their citizens.
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An open-source protocol for the borrowing of assets and deposit services. Aave has made a big play into flash loans, which allow borrowing with no collateral for arbitrage opportunities. It creates synthetic tokens by giving the depositor an “aTokens,” which is tied to the underlying crypto locked into the platform that then generates interest over time.
The Ethereum based open finance project is looking to give crypto investors the ability to invest in what the creator calls Strategy Enabled Tokens or Sets. These are algorithmically constructed bundles of tokens or other assets custom build according to different trading strategies and hedges. All of the Sets are ERC20 tokens that are tradable on any platform which accepts these types of standard. So far, more than $4 million of Sets have been created.
A DeFi focus wallet with all the functionalities expected from an open finance project in a mobile platform. The wallet not only is able to send and receive a wide range of coins and tokens, but it has additional capabilities. It offers a 2% interest rate on any deposited digital tokens. It allows for trading and exchange in one singular platform.
The DeFi world is burning with innovation despite the current troubles in the global economy. The finance world has never been in more need of change and evolution as the global economy has to adjust to a new reality. The projects mentioned above are at the forefront of a wave of transformation that will sweep the world and power charge the next iteration of society.