DeFi, as it is seen now, in 2021, causes mixed feelings. On the one hand, it is already acknowledged as a promising and even world-changing phenomenon. For example, a couple of days ago, the Bank of America released a report stating that digital assets were “a new computing paradigm… accessible everywhere and to anyone and owned by millions of people globally”.
Among other things, they highlight tokens that resemble full-fledged OSs; numerous dApps that need no intermediaries; the so-called stablecoins associated with the state-owned fiat currencies; central bank digital currencies; and even NFTs as bearers and symbols of the digital economy in general and digital art in particular. Happily, that is all so indeed.
On the other hand, at the beginning of October, a serious bug in Compound, “a popular decentralized-finance staking protocol”, all of a sudden gave $90 million to its users. As a result, its owner is now urging those users to return that money. So, as we can see, DeFi is not free from its “teething problems”.
So, what is DeFi now? And how can Evercode Lab help you master it, without tech issues and costly bugs? Find the answers below.
Frankly speaking, there is no universal definition of what Defi – or Decentralized Finance – is. However, one can still understand it, in a broad sense, as numerous available ways in which “financial products become available on a public decentralized blockchain network”. Therefore, it won’t be a mistake to view it as an array of digital assets fueled by, based on, and circulated via blockchain technology.
The DeFi segment started to visibly skyrocket more than a year ago. It is measured with TLV, aka “total value locked” which means the total value of cryptocurrencies held in decentralized finance. The DeFi TLV quickly rose from slightly over 1 billion USD in May 2020 and reached its record high, 98 billion, in early September 2021.
After that, the overheated DeFi sector plummeted down to 76 billion. However, decentralized finance quickly got back on track. As of October 6th, it is estimated to be slightly over 89 billion.
A more detailed breakdown looks as follows: Ethereum blockchain accounts for almost 70% of DeFi TVL. Other top alternative chains include Binance, Solana, Terra, Polygon, Avalanche, Fantom, Waves, Arbitrum, and Klaytn.
Advantages of DeFi
So, what has made those enormous growth rates possible?
Well, as a transborder P2P mechanism enabling its users to store and transfer digital assets without limits and additional costs imposed by the traditional financial institutions, it is capable of many good things. The three key almost universally acknowledged pros of decentralized financу, including:
- DeFi offers cost-efficiency. Basically, all it takes to start using decentralized finance is to have reliable access to the Internet. After that, each user is free to manage their assets at any moment of time while being independent of bank transfers with their countless fees
- DeFi ensures a greater speed, as blockchains are “updated as soon as a transaction” is performed
- Finally, DeFi provides for enhanced security, since “every single transaction can be seen by the public”
It is no surprise that, owing to these attractive inherent features, DeFi can create a truly transformational environment. A typical list of DeFi capabilities, according to Forbes, for example, may look like this:
- “Decentralized exchanges” aka “DEXs” understood as an opportunity to exchange digital assets without the need to use the services provided by “centralized exchanges”, such as Coinbase
- Traditional transactions including payments, borrowing, and lending, as well as trading for sure
- Independent wallets that are not tied to the well-known large service providers and can be used to safely store and spend your assets in the digital economy
- New ways of accumulating value with stablecoins based on real fiat currencies as well as skyrocketing NFTs
Evercode Lab for Your DeFi Projects
DeFi is still evolving and taking shape. Therefore, you can still make your successful way through this brand-new industry. However, to succeed, you need a reliable solution to work with DeFi. Such tools shall be built by experienced vendors.
As for the Evercode Lab team, we would be happy to assist you with building one. Among other things, Ethereum is the top blockchain for DeFi tools right now. We have already accumulated extensive experience and expertise in this domain. Such successfully delivered IT projects as this integration of the Ethereum dApps are the best proof of our reliability. At the same time, we can effectively deal with almost any popular blockchain such as Binance or DECENT.
So don’t waste more time and contact us!