2020 Has Been The Year of DeFi. Here’s How It Has Given Cryptocurrencies A New Lease of Life

DeFi has redefined how finance works in today’s world. With blockchain enjoying a world of its own, investors around the world have poured in hundreds of billions of USD to reap the rewards here.

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How Decentralized Finance Works in Crypto

Decentralized Finance or DeFi for short, is an inclusive and remodelled open finance format that typifies the unification of decentralized technologies (like the blockchain) and traditional banking systems. Simply put, DeFi systems aim to provide substitutes for existing financial services in the aspects of loans, insurance, savings, asset trading and lots more.

DeFi is largely dependent on decentralized applications (Dapps) on the Ethereum blockchain, and to understand its capabilities, the concept of Dapps must be adequately understood. 

Read Also: Here Is How Cryptocurrencies Have Become The Norm For Money Transfer

How Important is DeFi?

The importance of DeFi in the evolution of financial systems as we know them, cannot be overemphasized. This open finance format offers huge prospects for the expansion of global economies, and since 2019, it has been considered one of the most significant and rapid advancements in the cryptosphere by analysts.

Recent reports have also revealed that DeFi tokens are, without cessation, outstripping their compeer, having surged by over 200% since the start of 2020.

DeFi Apps and Crypto

At the moment, DeFi apps have grown in popularity and are already securing businesses, money and time. The emergence of Decentralized Finance platforms has become evident in virtually all parts of the financial sector, inclusive of cryptocurrencies. All DeFi apps are transparent, open-source, interoperable, flexible, and permission-less, as seen in numerous Ethereum-based projects. 

In the crypto sector, decentralized exchanges are perceived as the next big thing towards achieving the desired evolution. Decentralized exchanges (DEX) will eliminate the chances of theft and exchange hacks that have plagued centralized systems.

When crypto assets are traded on a decentralized exchange, the transactions are facilitated by smart contracts rather than traditional intermediary systems in centralized exchanges.

Smart contracts protect crypto transactions on the blockchain and ensure that the entirety of the system is not vulnerable to hackers. The DeFi ecosystem isn’t just flourishing, it is quickly changing the business approach of established institutions, while also facilitating the emergence of thousands of crypto projects.

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Here are some of the most exciting and interesting projects, in no particular order, and of course, by no means exhaustive.

1inch

Before the emergence of tokens and smart contracts, cryptos were normally traded via exchanges. Due to this, exchanges have enjoyed massive growth and have become major players in the crypto world. The surge in the popularity of Ethereum, created Decentralized Exchanges (DEX), and ever since, more DEX projects have launched on the ETH blockchain.

1inch improves on the existing concept by taking it a little further. To be more explicit, 1inch is a DEX aggregator that scans through all the DEXs on the Ethereum blockchain to obtain the best prices for any asset as desired by the user. 1inch offers a powerful tool, especially for users who are in the market for the best price margins.

One way to get the best of crypto investments is to research and purchase yet to be launched token on major centralized EXs. Being on the ETH network, purchasing 1inch tokens before they debut in large crypto economies, would be an excellent choice.

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Curve

Having kickstarted in 2019, Curve is another amazing DeFi application in the cryptosphere. It is an exchange pool built on the ETH blockchain, that utilizes bonding curves, and specifically designed to support and boost the trading of stablecoin (DAI, USDC, USDT and TUSD), while also providing low-risk income fees for liquidity merchants.

With Curve, users do not experience price fluctuations as they normally would on DEXs, when swapping one stablecoin for the another. In the case where assets on other DeFi platforms, especially Compound, are not being traded, Curve lends the assets and return interests to providers of liquidity.

Curve is accessible on mainnet via curve.fi and it supports DAI, USDC, USDT and TUSD. Trading and depositing are facilitated by MetaMask, a web3 wallet.

Compound

At the moment, Compound is a top-rated DeFi project, and it offers users the opportunity to borrow ETH tokens and payback with interests. Liquidity providers could also come into play by providing their token for loan purposes with the aim of receiving loan profit.

This platform offers huge profits, and at a time like this, where savings in traditional banks give little annual interest or lost to inflation, Compound becomes a lucrative option. Compound is intuitive and well-designed and can be accessed via mobile wallets or online channels.

Uniswap

This is an innovative automated market-making DeFi platform with a protocol that enables ultra-swift trade settlement between parties. The Uniswap protocol ensures that, as much as possible, the closing trade value of assets reflect their real market value. You can become a liquidity provider with amazing interest rates provided via a dedicated pooling feature.

Summary

As the major sectors of the global society tend towards decentralization, the demand for DeFi applications will no doubt skyrocket in the nearest future. At the moment, DeFi continues to remarkably disrupt and dictate the pace of today’s business systems, while also dictating new standards.

You Must Read: The 10 Leading Stablecoins of 2019 and What You Should Expect

Here Is How Cryptocurrencies Have Become The Norm For Money Transfer

Crypto beats fiat as a result of its flexible governance structures. With no Central Bank to look to, these digital currencies have taken on a new life as money transfer vehicles.

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Is the crypto option for money transfers here to stay? Here is what you need to know

Cryptocurrencies have become the new normal of money transfers. It is gradually becoming a thing to request a cryptocurrency wallet address rather than a bank account number when trying to transfer funds between counterparties. The reasons are obvious.

Crypto payments are fast and secure due to the cutting-edge technology of the blockchain. Also, transaction costs are minimal, making it a good choice from a business perspective since both sides get to keep the part of the payments that would have gone to settling payment transfer costs in a regular wire transfer.

Crypto transfers seem to be here to stay given all their benefits. However, there are existing limitations you need to keep in mind before converting all of your cash to BTC or ETH.

Reach

Despite having been in existence for more than a decade, cryptocurrencies have still not been adopted globally by most people. As at the beginning of the second quarter of 2020, there were 50.71 million blockchain wallet users worldwide, in contrast to well over a billion regular bank accounts. At this point, one would realize that there is a huge gap to be filled.

This is something to keep in mind as most people do not have cryptocurrency wallets, and you can’t transfer to them without one. A suggested solution is to try to open the conversation with clients or suppliers or any other business counterparties, encouraging them to open a blockchain wallet and make your business transactions seamless.

Price stability

This is a major issue with cryptocurrencies. Imagine getting a transfer of say 2 BTC worth $18,000, and just before you’re able to either pay for another product with it or convert it to a fiat currency, the value drops to $12,000, which is a $6,000 loss on a single transaction.

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A way around this is to transact in the stable cryptocurrencies known as stablecoins. The USDtether, for example, is tied to the value of the US Dollar. Tether cryptos are not as subject to volatile swings in value as other cryptocurrencies and this makes it safer to use them for transactions.

Government regulation

Some countries have strict regulations that limit the volume or usage of cryptocurrencies by law. For example, Binance was created in China but had to move to Japan due to issues with regulators. Be sure to confirm if there are no restrictions on the use of cryptocurrencies either within your own country or that of your counterparty.

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Platform Security

The safety of blockchain only guarantees that transactions and their history cannot be tampered with. Beyond that, your wallet is vulnerable to the extent to which you can protect your account. If malicious hackers gain access to your account passwords, your cryptocurrency funds will be lost. Hence, it is important to secure your wallet either through 2 Factor Authentication (2FA) or Authy.

As long as you keep the above factors in mind, the blockchain and cryptocurrencies ecosystem will make your experience with transferring money seamless even across borders.

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Despite The Marketplace Twists,Thorns and Thistles, Here Is How USDT Has Weathered The Storm

USDT has weathered the storm these past two years to soar to the third place on the list of the most capitalised crypto. Here is the journey so far for Tether this year.

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The meteoric rise of USDT in 2020 H1: Everything you need to know

Predictions for what will happen in the cryptocurrency world exist at any given time, and vary wildly depending on who you ask. Long gone are the days when Bitcoin was expected to reach $100,000 “by the end of the year,” although there’s still the odd enthusiast with overtly positive expectations to come up with such claims now and then.

Still, most movements in the crypto market are predicted by at least a few people, and in some cases these crypto gurus, when predicting such market changes, end up causing them in response.

However, 2020 has seen a market change nobody ever thought, among many other things the world has seen this year. Specifically, the rise of the USD Tether (USDT) and stablecoins in general has been higher than even the most optimistic of predictions.

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What’s USDT? Why is it important?

The USD Tether is the name of a specific stablecoin, USDT for short, whose value is pegged to that of the US Dollar. 1 USDT thus equals 1USD at all times. It’s one of many coins with prices pegged to those of fiat currency, and thus it is categorized as a stablecoin – because the price always remains stable.

Is it a bad coin? Why people never thought it could rise?

Stablecoins can be divisive among the community, because they imply the creation and use of blockchain as a means to move fiat instead of independent digital currencies – something some crypto enthusiasts consider against the spirit of cryptocurrencies.

However, stablecoins aren’t considered bad in general. Over the years, many crypto analysts have actually predicted they could become an entry point into cryptocurrencies for many people, and the relative safety of their prices has led several crypto exchanges, Binance chiefly among them, to adopt their own stablecoins and offer instant exchanges into them to crypto holders.

Stablecoins are, thus, quick ways for holders to jump out of the market without necessarily going through the bothersome process of turning their crypto into fiat. Since this process doesn’t involve actually exchanging tokens for fiat, but for other tokens, many of the costs – such as a bank transaction and withdrawal fees – are skipped. It’s the preferred way for holders and traders to take a step away from the market if they plan on returning to trading soon.

But why would USDT grow so suddenly? Why would it get popular? Are new people joining the market?

The reason USDT has risen in the past few months has little to do with newcomers and a lot to do with existing crypto traders, current events, and how those shape the economy.

As had been long predicted, a worldwide recession is underway, and if you believe certain predictions, we’re yet to see the worst of it. The current pandemic, along with the gross mishandling of it by many world governments, is leading the worldwide economy towards a second shutdown within a year, one that’s expected to hit much worse than the first one.

And the thing about the first one is it proved many theories about cryptocurrencies’ place in the economy, well… wrong.

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Wait, what was wrong?

One of the most commonly held beliefs among cryptocurrency enthusiasts was that crypto would rise if markets went down. Some people went as far as to call it the new gold, usually following the (not quite true) belief that gold always goes up when markets go down.

However, March and April 2020 told a much different story: As COVID-19 had markets close and stocks went down across the board… so did cryptocurrencies. Ether hit its year-long low in mid-March, having shed 50% of its value in a span of just two weeks. Bitcoin did likewise in April, hitting a year-low price of just under $5,000/BTC – less than 50% of the high reached back in September, which had the token valued at almost $12,000.

Being the main tokens in the market, they’re often used as a way to see the current trend in crypto prices. Both tokens severely underperformed when the recession first hit, and while both have also recovered since (Bitcoin partly helped by its May 2020 halving,) with a second, worse recession dip in our doors its only understandable people are trying to jump ahead of the market.

Will this rise last?

USDT isn’t much of an investment, being tied to the value of a clearly inflational currency, and therefore there’s little reason to hold it in a world where cryptocurrencies aren’t yet mainstream. But,the green light is in the fact that mnay hold it as a midpoint between investing and selling off their crypto holdings.

USDT is currently serving as a bellwether for crypto traders who fear the current economy might send token prices to the ebb. Once markets recover, however, many of them will jump back – and USDT might return to its regular trade values or yet, grow stronger.

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