Decentralized Finance or DeFi has been the biggest story in the blockchain space in the year 2020. This segment of blockchain has exhibited phenomenal growth as the total value locked in DeFi protocols swelled from $690.9 million on 1 January 2020 to $13.43 billion on 26 December 2020.
What is DeFi?
Revolutionary FinTech leaders favor DeFi very strongly. They believe it is the disruption that could prevent the happening of another financial crisis like the year 2008. That is because decentralized finance (DeFi) is built on top of a decentralized ledger and ensures transparency in all financial transactions. Moreover, the transaction approvals in the DeFi ecosystem come from the network participants and these participants are incentivized for facilitating the transaction approvals.
Along with financial transparency, DeFi provides financial accessibility and inclusiveness to those who do not have access to the current financial system. The DeFi ecosystem started as a system to decentralize financial services. However, it evolved rapidly and currently provides services like loans, insurance, margin trading, exchanges, and yield farming to the end-users.
The DeFi Challenge
2020 witnessed a big economic challenge triggered by COVID-19. Due to this, blockchain and the DeFi segment got the day in the sun. However, the entry barrier to DeFi for a novice crypto user is high. The existing DeFi platforms are not intuitive and accessible enough. They pose different levels of complexities to an average crypto user. Thus, there is a huge scope for intuitive Defi development in this rapidly evolving segment of blockchain.
What is the business scope of DeFi?
DeFi platforms are basically decentralized applications (dApps) built on top of smart contract capable blockchains. These are Ethereum, EOS, and more. A DeFi development company builds phenomenal products around new DeFi concepts. Here are some of the concepts DeFi has brought in:
- Yield farming
Yield Farming is a way through which DeFi users can maximize returns on their crypto assets. It involves lending the assets to other platform users via a smart contract. The farmers can earn fees for lending their assets. However, to make farming profitable enough, the farmers need to develop complicated strategies.
- Liquidity mining
It is a form of yield farming only and is a network participation strategy. In liquidity mining, the users help build a liquidity pool for a protocol. In return for providing the capital, the users receive the protocol’s native tokens.
- Composability and Money legos
Composability is also known as the secret sauce of DeFi. Things need not be built from scratch but using the existing products, innovation can be bought in. This is because DeFi apps are open source and anyone can use them to build a new app. Some of the great examples of composability are tokens and smart contract calls. Thus, DeFi development services can put together a new and innovative financial product pretty quickly.
Most popular DeFi concepts
Some of the DeFi concepts have received a great response from the crypto community. Some of these are:
- Decentralized exchanges (DEXs)
These are the crypto exchanges where DeFi users can exchange their assets without an intermediary. DEXs are very hot in the market. This is because traders can exchange their assets without trusting any centralized body. They use smart contracts to ensure the trustless exchange of assets.
- DeFi Lending platforms
This is one of the most popular platforms in the DeFi ecosystem. The users can lend their crypto assets to other users without any intermediaries such as banks. These platforms use smart contracts to manage lending in a trustless manner.
- Decentralized Crypto Banking
Many traditional banking users understand that they are paying hefty fees to banks for handling their money. Decentralized crypto banking basically allows the validation-free transfer of assets between two parties. The decentralized crypto banking platforms come with a wallet, value holding and transfer capability, and transactional analysis.
- DeFi Lottery System
Secure and legal lottery systems can be powered by DeFi. Using such a platform, the custodianship of pooled capital is eliminated; this ensures no rug-pull. Along with that, it comes across as a very democratic lottery system as the draws are processed by smart contracts.
- DeFi Wallet
With a DeFi wallet, users can be their own bank. These completely decentralized wallets make sure that the users can control their funds without a centralized wallet or a traditional bank.
- DeFi Staking Platform
DeFi staking platforms have become extremely popular in 2020. As these platforms are democratic and transparent, users trust them for robust reward management.
The scope of DeFi development is endless. A reliable and experienced Defi development company like Antier Solutions can help entrepreneurs with an innovative idea to build solutions like Derivatives over DeFi, Decentralized Fund management platforms, DeFi Insurance systems and much more. Our expertise spans across different business verticals and we have a deep-rooted understanding of how enterprises can benefit from DeFi.
Connect with our subject matter experts to share your requirements for DeFi development.