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All You Need to Know About the DeFi Market

Wisebitcoin 2021-03-30

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The cryptocurrency market has picked up speed in recent years and is growing at an exponential rate. This indicates a boom in several other markets. One of them is Decentralized Finance, or DeFi, as it’s popularly known. 

DeFi is the fusion of blockchain technology with financial services. This could trigger a very commonly asked question: “Isn’t that what crypto already is?” The answer to this question is “Yes, it is!” But it’s not just that. DeFi is an umbrella term for applications that eliminate the need for financial intermediaries. It includes a variety of projects built on top of blockchain networks that go beyond offering a currency. 

Like cryptocurrency, DeFi is based on blockchain technology, but it expands to even more complex financial use cases, unlike crypto. It is a specific genre of financial markets that works in a decentralized ecosystem. The major difference is that it also invites investors to play with financial products that are highly-experimental in nature through lucrative incentive mechanisms. It even creates alternatives to savings and checking accounts, loans, asset trading, insurance, and other traditional financial services. 

 

What are Dapps?

Dapps, or Decentralized Applications, are the programs that function within the decentralized networks that enable DeFi. As their name suggests, they are not regulated by any central authority. No business function of the application depends on external authority, it depends on the code instead. The most interesting part of Dapps is they don’t need human intervention, for the most part, since they integrate advanced smart contracts that can streamline business systems.

 

What are the Benefits of DeFi?

The DeFi ecosystem is emerging throughout the world in every financial sector. Let’s get to know the reasons behind its popularity. 

  • Public and Stable Code

Open source code provides a more secure experience than private code and develops confidence in the users operating the platform. Anybody can ensure that it's functional, secure, and capable. It also allows anyone to see that no other code is being operated in the background of the platform that could harm them. This makes it a core feature in DeFi Dapps.

  • Transparency

Traditional banks are pondering over the thought of an open banking system. Meanwhile, DeFi is much ahead in the game since it’s built on an ‘open-finance model.’ DeFi functions on the public blockchain and keeps every bit of transaction and other activities public. However, this does not compromise the privacy factor as all accounts are usually pseudonymous.  

  • Access from All Over the World

To become a member of the DeFi community, all you need to have is a smartphone with Internet access. You can be in any part of the world and can register on a DeFi platform. This successfully deals with traditional banks’ limitations in which people living in distant or remote areas remain unbanked. It’s the first time in history that 100% of the global population is provided with access to financial services, with no location barrier. 

  • No Permission Required

Unlike the traditional banking system, a DeFi application can be developed by anyone in the world. Doing away with the need for a centralized third party allows for more inclusive, community-owned services. Since the community members run the platform, you don’t have to deal with situations where transactions aren’t completed, or accounts are arbitrarily blocked. It’s a free-flowing platform where invested users can easily add value. At the same time, security and transparency are maintained thanks to the auditability of blockchain protocols. 

  • Interoperable

DeFi platforms serve interoperability to their users as a critical component. This means that their features can interact freely with other platforms’ features, especially when they’re a part of the same blockchain network. This kind of seamless integration allows the users to stack their DeFi financial products and results in expanded creativity in the digital economy’s design.

  • Allows Flexible Lending

DeFi markets exercise flexibility in their operations and allow the integration of third-party platforms to promote smooth functioning. Moreover, if you find the current options insufficient, you’re allowed to build your own interface. The DeFi lending sector also reflects flexibility and convenience on its platforms, contrary to what happens in traditional banks.

 

Emerging DeFi Tokens of 2021

Today, the DeFi industry has become the top-most ecosystem for high-value tokens.  These assets are enforcing favorable trends in the market, facilitating high profits to everyone who is investing in the right project at the right time. Below are some of the most popular DeFi tokens of this year.

  • Chainlink (LINK)

Chainlink, steadily rising since last year, is currently the number one DeFi token by market capitalization. It is an Oracle and designed to facilitate inputs and outputs for complex smart contracts that can be connected to real-world data, events, and payments.

  • Uniswap (UNI)

UNI is an Ethereum token that has grown by a great margin in recent months. It uses an automated liquidity program which is a relatively new type of trading paradigm. To earn UNI, liquidity has to be provided to selected pools.

  • DOT

The DOT token is the native token of the Polkadot network. It can be used to participate in governance decisions which include tabling proposals, voting, and bonding. Users are also allowed to delegate their tokens to stakers. They can allocate votes to other users to earn a percentage of new DOTs minted by the protocol.

  • SUSHI

SUSHI is the native cryptocurrency of the SushiSwap software. These are given as rewards for liquidity mining. It allows its users to participate in the platform’s governance, and the coin entitles them to a portion of the fees paid to the protocol by traders.

  • FIL

FIL is the native token of Filecoin. It enables smart contracts that are known as File contracts, facilitating users to program conditions around storage services. The FIL tokens are versatile digital assets whose algorithm offers trustless, decentralized cloud storage and unlocks unused storage in computers worldwide.

  • Aave ( AAVE )

Aave is a leading lending decentralized system that allows users to lend, borrow and earn interest on crypto assets. The whole protocol takes place without the presence of middlemen. This process requires the involvement of their native token, LEND. 

  • Synthetix ( SNX )

Synthetix is a derivative and decentralized exchange that allows the issuance of synthetic assets. Its protocol uses two tokens. The first one is SNX which is the primary form backing up the Synthetix assets. The second one is Ether ( ETH ) which is used as collateral in the synthetix system with a three-month trial.

 

The DeFi market and the tokens are playing a major role in the process. They are setting new standards for the global economy, driving it in the direction of financial democracy. 

If you wish to become a part of the DeFi ecosystem and ready to invest, Wisebitcoin can help you. We are a trading and exchange platform that facilitates all the leading DeFi currencies. Our rich liquidity pool combined with scalability and potential growth facilitates a user-friendly platform. We are motivated by the mission to build high-end blockchain technology infrastructure in the field of finance and investment. 

If you are interested in joining our platform and experience the services from a reliable, fast, and easy platform, visit our website at https://www.wisebitcoin.com/en/. We’d love to help you with our innovative and modern financial solutions.