Is DeFi The Future of Crypto Finance? Some Big Industry Names Think So

The hot potato in the world of crypto at the moment is decentralized finance. Satoshis original notion of cutting out the bankers is now possible in this new world of digital assets and DeFi protocols. The industry is still embryonic but some of the bigger names in the world of crypto and finance are finally paying attention.

Crypto Wealth Management Built on ETH

By definition decentralized finance is a movement that leverages decentralized networks to transform old financial products into trustless and transparent protocols that run without intermediaries. In essence it is doing away with the banks and middlemen to allow people to manage their own wealth on autonomous networks governed by smart contracts.

DeFi is currently dominated by DAI which is a decentralized hard asset backed, dollar pegged stable coin. DAI, and the MakerDAO platform uses margin trading to respond to changing market conditions while preserving its value against the major world currencies. Maker is a smart contract platform on the Ethereum blockchain that backs and stabilizes DAI through a series of dynamic feedback systems called Collateralized Debt Positions (CDPs).

By depositing ETH, people can borrow stable DAI to make other investments without risking the loss of ETH, which is what happened to most during the ICO boom. Essentially it is a crypto credit facility that can issue loans at certain interest rates. Stakers are also able to use it to generate interest while protecting their stake. Industry observer Alex Saunders noted that in a world of negative interest rates DeFi could be the answer

Maker is not the only DeFi platform out there but it is the most popular at the moment. Two others have recently be noticed by crypto exchange giant Coinbase which announced a new fund to invest in the fledgling industry.

Coinbase Invests in DeFi

In a company blog post yesterday, Coinbase stated that it aims to encourage growth in DeFi by channeling funds into the development of two protocols. To begin it will contribute 1 million of its own stablecoin, USDC, each to the development of the Compound and dYdX platforms.

Coinbase USDC Bootstrap Fund lead Nemil Dalal said that DeFi is a tiny portion of the world of banking and financial transactions, adding that the company is tracking growth in an effort to further fund its expansion.

Just last month Nasdaq announced that it was adding a decentralized finance index (DeFiX) to track the projects working in the field. It initially included Maker, Augur, Gnosis, 0x and two other obscure tokens but failed to include Ether which currently powers most of the industry.

Image from Shutterstock

The post Is DeFi The Future of Crypto Finance? Some Big Industry Names Think So appeared first on NewsBTC.

10.09.2019 / 23:10 13
P2P Crypto Lending Is on the Rise P2P Crypto Lending Is on the Rise
As peer-to-peer cash, it only seems logical that cryptocurrency should be deployed for P2P lending. While that application has taken time to
Decentralized Finance (DeFi) Growing To Reach ‘Billions of Users’ Study Finds Decentralized Finance (DeFi) Growing To
The latest decentralized finance (DeFi) aims at creating new business solutions built on distributed, permissionless networks. A Binance Research
Ethereum DeFi Products Hit Milestone as ETH Falls Against Bitcoin Ethereum DeFi Products Hit Milestone as
DeFi on Ethereum Gains Steam Decentralized finance, best known as DeFi, has rapidly gained steam on Ethereum despite the fact that ETH is currently
Ethereum Stays in Massive Downtrend Against Bitcoin Ethereum Stays in Massive Downtrend
Ethereum was on the top of its game during the 2017’s ICO mania. Thousands of projects lined up to launch their so-called decentralized assets atop
Dozens of Decentralized Exchanges Making Their Mark on Cryptocurrency Industry Dozens of Decentralized Exchanges
The world of cryptocurrency exchanges will undergo some big changes. Centralized services remain popular, but decentralized solutions are gaining
HOPEBOOK Readies For Launch Event – Will Forever Change The Way People Around The World Approach Banking & Finance – The World’s Most Transparent Financial Rotation System HOPEBOOK Readies For Launch Event –
This revolutionary platform will be the World’s First Decentralized Community Fund. No longer will financial matters be controlled by the super
Comments (0)
Add a comment
Comment on