If you have been closely following the developments in the crypto industry, then you probably already know that the DeFi ecosystem is quickly gaining popularity.
Here’s what it is, in a nutshell 👇
DeFi is short for Decentralized Finance.
That’s it? And what’s the secret to this popularity, you may ask.
The secret is that there is no secret. The core idea of DeFi is to recreate the traditional financial instruments in a decentralized fashion and make them independent from regulatory bodies and third parties.
One of the ways to implement this idea is to use blockchains that support smart contracts, for instance, Ethereum.
The key difference in DeFi is that all assets are decentralized. Only you can have access to your assets.
In other words, you have complete control over your finances — there are no various intermediaries handling them.
The DeFi ecosystem utilizes dapps (decentralized apps) that allow to create stablecoins, lend funds and earn interest on crypto assets, get loans, exchange assets, short sell and make use of automated investment strategies.
The crypto community shows a growing interest in DeFi.
At the moment, there is $888 million worth of DeFi instruments value, and the figure is rising fast. Over the past year, this amount has grown more than 3 times (compared to $240 million as of February last year).
Of course, the Roobee team cannot ignore the DeFi movement.
There are several reasons for introducing DeFi elements:
First, it will allow users to exchange their crypto assets with no middlemen involved: DAI → ROOBEE, ETH → MKR, USDC → WBTC, and so on.
Second, users will have the opportunity to lend their crypto assets to earn interest. For instance, the current DAI lending rate reaches 7.81%, while the rate for lending USDC is 4.32% per annum.
Finally, it will help to increase the diversity of the financial instruments presented on the platform.
☝️ All of this will allow the user to add reliable investment instruments from the alternative sector to his portfolio, and thus diversify the risks.
The DeFi sphere is growing rapidly. At this point in time, it’s still a long way from catching up with the regular financial industry, however, one never can tell what the future has in store for DeFi, and what innovations this sphere will yield.
What do you think about the idea behind the DeFi concept?
Leave your comments in the Roobee chat .