Defi Cryptocurrency – Is this the Game Changer?

Defi Cryptocurrency is sending out bona fide market signals that point to projects and opportunities where capital is warranted, and traders/investors are responding, some are even putting their bitcoins into DeFi platforms to take advantage of the higher yields in the fast-growing arena.

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Defi Crypto – Is this the Game Changer?
Defi Crypto – Is this the Game Changer?

Defi Cryptocurrency: While the still-fledgling digital-asset markets seems to get increasingly more rational and functional these days even than Wall Street, the various ups and downs of token prices are sending out bona fide market signals that point to projects and opportunities where capital is warranted, and investors are responding. 

Mainstream investment analysts and Wall Street Journal columnists now assert matter-of-factly that the stock market is merely propped up by this year’s $3 trillion of money-printing by the Federal Reserve.

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DeFi – The Game Changer?

Sure, bitcoin has benefited from the perception that the largest cryptocurrency might benefit from inflation, since many investors see it as a hedge against currency debasement, similar to gold. 

Far more fascinating are the capital flows into the semi-autonomous lending and trading systems being built atop the Ethereum and other blockchains under the rubric of “decentralized finance,” otherwise known as DeFi.

What is DeFi Crypto?

Defi means “decentralized finance.” By definition, it’s a crypto ecosystem made up of financial apps designed on leading blockchain platforms.

Defi, in short, is the use of blockchain technologies (including smart contracts, decentralized asset custody, etc.) to replace all “intermediaries” with program codes, therefore maximizing the efficiency of financial services and minimizing costs.

These digital assets are designed on Ethereum codes, and usually exhibit characteristics that include having protocols and financial smart contracts.

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But Why is DeFi assets Important?

Using “Defi” technology, one can build smart contracts with codes that facilitate the actions of intermediaries, including managing and accepting deposits, handling collateralized loans, and liquidating collateral assets as per the terms of the contracts should their values fluctuate.

As a credit to blockchain technology, the contract codes cannot be terminated or manipulated by any entity, and are executed with specific conditions.

DeFi Project A real market?

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Soaring token prices for projects like Aave, Chainlink, Compound and Curve, not to mention good-luck-explaining-this-to-your-friends’ outliers like Yam and Spaghetti, have indeed attracted capital, at least for stretches. According to DeFi pulse, total value socked away into the platforms has jumped 10-fold this year to $7 billion. 

It might all just be speculative hype, but that might actually be preferable to global foreign exchange markets that are heavily influenced if not controlled by central bank officials. 

Within the digital-asset ecosystem, investors have figured out how to quickly allocate and reallocate capital whenever new opportunities arise.   

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According to CoinDesk’s Daniel Cawrey, that juicy returns in the DeFi market are making some investors shift away, at least temporarily, from putting their money into options contracts on bitcoin.

“Every derivatives trader that was looking for incremental yield and levered returns has been besotted by the magnitude of moves in DeFi,” Viashl Shah, founder of derivatives exchange Alpha5, told Cawrey. “So, naturally, cost of capital dictates at least some attention that way.”

Traders are even putting their bitcoins into DeFi platforms to take advantage of the higher yields in the fast-growing arena. 

Since the start of the year, the number of bitcoin locked in DeFi has grown 34-fold to about 49,000. 

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It might be a bubble, but at least it’s not a game of trying to anticipate the Fed’s next move. In fact, there’s even room for investors to take bets on which projects might become dominant players in the future, without struggling so much to understand what exactly is happening, as often seems to be the case these days in so many traditional markets. 

What is the future of DeFi Crypto?

Because it is a model that works, DeFi crypto is setting the trajectory of a future of financial services that will run from blockchains via smart contracts and that is capable of cutting down or morphing financial institutions globally.

“DeFi long term will revolutionize finance, but this short-term bubble is bound to pop eventually, in my opinion,” Michael Gord, co-founder of trading firm Global Digital Assets, told Cawrey.

So certainly, it’s almost like a real market and traders/investors are already doing what they got to do. 

DeFi Crypto FAQ

What is DeFi Crypto?

Defi Cryptocurrency – Is this the Game Changer?

Defi means “decentralized finance.” By definition, it’s a crypto ecosystem made up of financial applications designed on leading blockchain platforms as smart contracts, decentralized asset custody, etc which replaces all “intermediaries” with program codes, therefore maximizing the efficiency of financial services and minimizing costs.

Why is DeFi Crypto important?

Using “Defi” technology, one can build smart contracts with codes that facilitate the actions of intermediaries, including managing and accepting deposits, handling collateralized loans, and liquidating collateral assets as per the terms of the contracts should their values fluctuate.

Is the DeFi project a real market?

Yes, investors/traders are even already putting their bitcoins into DeFi platforms to take advantage of the higher yields in the fast-growing arena. in fact, since the start of the year, the number of bitcoin locked in DeFi has grown 34-fold to about 49,000. 

What is the future of DeFi Crypt?

“DeFi long term will definitely revolutionize finance” according to Michael Gord, co-founder of trading firm Global Digital Assets. As a model that has been tested and found to be working, DeFi crypto is already setting the trajectory of a future of financial services that will run from blockchains via smart contracts.

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