In the crypto space, 2020 has turned out to be the year of Decentralized Finance, also known as DeFi. Contrary to what many have been proclaiming, decentralized finance development hasn’t come across as something that will overthrow the incumbent system. Rather, DeFi is complementing traditional finance, a welcome situation for enterprises as well as users.
The technology has made the financial system more democratic, making operations even more flexible for enterprises and opening up more revenue sources for them. At the same time, the introduction of DeFi has resulted in enhanced efficiencies and immense cost-savings for users.
Finance large enough to accommodate both DeFi and CeFi
A few people argue DeFi will sound the death knell for Centralized Finance, also called CeFi. However, both ecosystems can co-exist and complement each other. Of course, there is a shift from CeFi to DeFi, but the space is large enough to accommodate both.
DeFi has opened up immense possibilities in business. Keep a watch on the upcoming businesses in DeFi space and you will be astonished. The innovation and quality of the application will leave you astounded.
The possibilities are seemingly endless — asset management, DeFi coin development, Decentralized Autonomous Organizations (DAOs), decentralized exchanges, derivatives, insurance, stablecoins, staking, and more.
Dig into these domains and you can find numerous business models. Analyze the tokenization of assets and you will find even an expensive art piece can be tokenized. Explore asset management tools and there will be crypto wallets with no centralized authority controlling them — users will have complete control over their assets. These wallets will show your holdings in Dollar, Pound, Yuan, or any other popular fiat currency, making it easier for traders and investors to work on their assets.
Ethereum 2.0 — the power behind DeFi
Ethereum 2.0 is serving as the core of decentralized finance development. Most DeFi applications are built on the Ethereum blockchain. As of October 6, 2020, DeFi Prime had 217 DeFi projects listed on it, out of which 205 were built on the Ethereum blockchain. DeFi Prime is a media outlet offering a curated list of DeFi products.
The developers of Ethereum 2.0 had DeFi in mind even before its inception. Today, Ethereum has emerged as the foundation of the DeFi ecosystem. On the other hand, DeFi upstarts have helped Ethereum become and sustain as the world’s second-largest blockchain.
OGs of DeFi
DeFi is at a nascent stage and even the OGs (old guys) aren’t more than a few years old. The first few walkers, which also happen to be some of the largest companies in the arena, are Uniswap, MakerDAO, Compound, Aave, and dYdX. A dive into what these companies offer will give you an idea of how DeFi operates.
- Uniswap allows traders to exchange Ethereum tokens with no need to trust a central party with their funds.
- MakerDAO is a credit facility that issues DAI stablecoins against collateral.
- Compound is an algorithmic money market protocol that provides users with collateralized loans or lets them earn interest on their assets.
- Aave is a non-custodial protocol that facilitates borrowing of assets and earning of interest on deposits. The protocol also allows conditional uncollateralized flash loans.
- dYdX is a powerful open trading platform for margin trading, borrowing, and lending crypto assets.
Doing business in the age of DeFi
There is no dearth of opportunities in the era of DeFi and you are only going to be restricted by your resources and limits of imagination. Thanks to decentralization, DeFi allows you to implement ideas that were simply impossible to execute in the conventional frameworks. Depending on what you want to do and your experience, DeFi provides you the means to implement your concept.
At Antier Solutions, we provide a host of offerings for decentralized finance development — from decentralized crypto exchange and wallet development, DeFi coin development, decentralized banking ecosystem development, DeFi insurance system development, and more.
Connect with our subject matter experts to share your business needs.