DeFi — The Push that Blockchain Needs

When we think of Finance in any way, whether it be lending, borrowing, trading, etc. we think of all the entities involved as well like brokers, traders, banks, institutions, etc. While this may be a traditional process and despite being long and tedious from a user perspective, many people are still comfortable with it.

What if I tell you, that we can get rid of all these problems, eliminate the middlemen, slow transactions and completely remove the offline process, Exciting isn’t it?😀

Well, again it’s none other than, Drum Roll *** Blockchain to the rescue, where we make the complete Financial Processes that I talked about above Decentralised, this new popular space is referred to as DeFi:)

DeFi

Decentralized Finance has really created a buzz, around the Blockchain Space. It’s essentially a conventional financial tool built on a blockchain (majorly on Ethereum). Under DeFi just like finance, you have various different protocols that represent various finance usecases like Lending, Exchanges, Prediction Markets, Investment Platforms and so on.

The rise has been so significant for the past year or two, which is best identified by numbers, approx $697.4M worth assets are currently locked up in DeFi(Trust me this isn’t a dream 😯).

As I mentioned earlier this has really changed the Blockchain Landscape, you can find more information here for information regarding stats, leaderboard in terms of profits made by various DeFi Projects, check out it out. Now let’s dive deep and I’ll talk about various projects on Ethereum(I’ll only be covering a few of them).

Maker Dao

If you are a part of Blockchain Space you must have heard of DAI Stable Coin which is pegged to the US Dollar, well the protocol behind it is Maker DAO. What makes it unique is each DAI is backed by Ether instead of a 3rd party claiming to have the required collateral. Since Ether is volatile this poses some interesting challenges to maintain the peg.

Along with DAI, they have another Maker Token which basically makes Governance Decisions, since it’s a DAO(Decentralized Autonomous Organisation) which means all governance-related decisions aren’t centralized.

Maker has really revolutionized the DeFi Ecosystem, Currently, $374.3M is locked in Maker, and it has acted upon typical financial problems a Centralized System usually has.

Compound Finance

Compound Finance is an open-source Protocol that allows you to create various money markets on Ethereum, you can supply assets, borrow assets after collateralization, etc.

By innovating on the lending and borrowing process Compound Finance seeks to address a problem found with holding digital assets, which is financial yield. Yield is the income that is returned on investment. It is attempting to bridge the lending, borrowing gap by providing yield on non-yielding assets, and borrowers can borrow those assets for their own productive use.

Currently, $92.7M is locked in Compound across various money markets and is one of the most popular projects in the DeFi Ecosystem, do check it out.

InstaDapp

One of the cons of Decentralized Finance, is there are a lot of protocols out there catering to Stable Coin, Lending, Derivatives, Exchanges, etc. So it’s difficult as a User to keep a tab on what’s the exchange rate, the market state where you have invested in or borrowed from, Interest Rate, Asset to Collateral Ratio, etc

But Don’t worry, it’s InstaDapp to the rescue, it provides an easy to use, User-Friendly Dashboard and a Smart Wallet with various protocols like Maker, Compound, etc. integrated, so you can monitor your investments, do operations that you would do on individual apps, etc. and on top of it it’s completely decentralized.

Currently, it has $44.4M locked up, and it’s turning out to be a very useful tool/interface for DeFi Users.

Sign Off

2019 was a pretty big year for DeFi in particular with so much happening in the space, hope 2020 is an even bigger one. As a Developer, I have just recently started exploring DeFi, gone deep into it & personally it really fascinates me.

I only talked about a few popular DeFi Projects, you can check out the complete list here.

Hope you gave it a read & I have been able to create some sort of awareness in you regarding DeFi:)

Do give you feedback if any & as always do not forget to clap 👏

You can reach out to me on LinkedIn for any sort of queries.