May 31st, 2023
Decentralized Finance (DeFi)
Check the latest news about Decentralized Finance (DeFi) – feel the pulse of the major innovations, stay up to date on the industry’s key players, and explore expert technology insights.
Jimbos Protocol Suffers $7.5M Loss in New Hack as Token Plummets 26%
By Mayowa Adebajo
May 29th, 2023
The incident comes barely three days after Jimbos Protocol launched its version 2.
MiSon: Capturing DeFi Value and Creating Excess Profit
By Kseniia Klichova
May 19th, 2023
Fintech companies have long been considered the most innovative part of the financial industry, with their fluid applications and easy-to-use user interfaces posing a significant challenge to the traditional banking experience.
European Lawmakers to Review Smart Contract Laws that Threaten to Kill DeFi
By Bhushan Akolkar
May 8th, 2023
Three top European regulators will get together to discuss the implications of the Data Act and provide more clarity with the goal of not stifling DeFi innovation.
zkLink Announces First “Dunkirk Test” to Establish New DeFi Safety Standard
By Chainwire
May 3rd, 2023
zkLink, a multi-chain trading middleware utilizing zero-knowledge proofs, announces the first “Dunkirk Test”, a new DeFi safety standard, on May 11-13.
French Central Bank Puts Its Suggestions for DeFi Regulation
By Bhushan Akolkar
April 12th, 2023
The French central bank seeks to address the regulations for DeFi and stablecoins which go unattended in the pan-European MiCA regulations.
Euler Finance Hacker Turns In $31M as Recovery Efforts Come to Close
By Mayowa Adebajo
April 4th, 2023
The decentralized lending platform was exploited in a March 13 flash loan attack, causing it to lose $197 million worth of crypto assets.
Collective Finance to Launch Its Public Tokens Sale on Binance Smart Chain
By Benjamin Godfrey
March 17th, 2023
Participation in the Public sale is through the Collective Finance DApp and by navigating to the Presale Tab.
Crypto Funding Turns from CeFi to DeFi Following Major Collapses
By Sanaa Sharma
March 6th, 2023
According to the report, the numbers prove that Decentralized Finance is the new high-development and growth area for the crypto space. The report also suggested that a dip in Centralized funding projects was seen because of a possible saturation in the sector.
Quasar Finance Completes $5.4 Million Funding Round
By Mayowa Adebajo
January 12th, 2023
According to a blog post by the firm, Quasar will use the majority part of the fund for product development.
Coinbase Stock Sinks to All-time Low as Slow Holiday Week Begins
By Tolu Ajiboye
December 28th, 2022
Crypto exchange Coinbase plunged to a $32.65 all-time low as the S&P 500 and the Nasdaq Composite also slipped up.
DeFi is a short way of writing Decentralized Finance. Generally, DeFi encompasses cryptocurrencies and financial smart contracts, protocols, and decentralized applications (dApps) that are built on the Ethereum blockchain. To break it down further, DeFi is simply a blockchain-based financial software that can be joined together piece by piece like Legos.
The Key Components of DeFi
The key components of DeFi include digital assets, smart contracts, protocols, and decentralized applications. A good example of DeFi is Bitcoin and stablecoins, the likes of Paxos Standard, USDT, and Dai. DeFi applications do not need arbitrators or intermediaries to be functional. At all times, every user has total control over their funds, and the code is used to specify the resolution of any dispute that might arise.
What are Some Common Functionalities of DeFi?
DeFi currently has three main functions and they are:
- For creating monetary banking services. An example of this is the issuance of stablecoins.
- For providing platforms that can be used for peer-to-peer borrowing or pooled lending.
- For making advanced financial instruments a reality such as prediction markets, tokenization platforms, DEX, and derivatives.
Decentralized Exchanges vs. Decentralized Applications
A decentralized exchange (DEX) is a cryptocurrency exchange whose mode of operation is decentralized in nature. Meaning that no central authority has the final say over its working. At Decentralized exchanges, peer-to-peer cryptocurrency trading is allowed. Like the decentralized exchanges, Decentralized applications (dApps) aren’t under the control of any single authority. They are digital applications or programs that operate on a blockchain or peer-to-peer computer network, rather than a single computer.
Popular DeFi Apps
Some popular DeFi apps include the following:
- Chainlink is a decentralized network protocol that enables the transfer of data through smart contracts between blockchain sources. To carry out this process via an oracle, the network uses its LINK token as a means of payment. Chainlink is also used to power the growth of DeFi applications.
- Uniswap is a decentralized finance (DeFi) protocol on the Ethereum blockchain that enables swapping of ETH and other ERC20 tokens. UNI is Uniswap’s network governance token and is used to fuel the system operations.
- Balancer is a decentralized finance protocol that serves as an automated maker for the market that lowers the cost difference between two or more ERC 20 tokens on the Ethereum blockchain network. BAL is the Balancer’s official token used as a means of payment on the network.
- 0x is a decentralized protocol built on the Ethereum blockchain network to enable peer to peer exchange of ERC20 tokens. 0x is also referred to as decentralized exchange (DEX). Its token, ZRX, is used to pay for services on the protocol.
So What’s Next for the DeFi?
The future holds a lot in store for DeFi. The financial industry is fast moving towards a future of digital money. Hence, the need to explore DeFi the more. As at the time of writing, the market worth of Decentralized finance is over $4 billion. For many companies, the Ethereum blockchain has become the favorite go-to for their financial products. These companies make use of the Ethereum blockchain to build every one of their financial-related products. As time passes, the world can expect more DeFi products.
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FAQ on Decentralized Finance (DeFi)
Why is DeFi the hottest topic in cryptocurrencies in 2020?
Remember the promise of cryptocurrency to make money and payments accessible to everyone, regardless of where they are located? Well, Decentralized Finance (DeFi) is taking that a step further. DeFi was initiated to bring about a global, open alternative to the financial services of today. This includes services like insurance, loans, trading, savings, and a host of others. Because of DeFi, they will become more accessible to anyone who has a smartphone and an Internet connection, no matter their geographical location in the world.
What are dApps (Decentralized Applications)?
DApps are applications built on the most popular programmable blockchain in the world, Ethereum. These Ethereum-based applications can create, store, and manage cryptocurrencies on the blockchain. Also known as smart contracts, DApps are agreements or contracts that are enforced by the Ethereum blockchain. These agreements are irreversible and you can create such complex contracts without needing a middle man. A good example is Ocean Protocol, a project built to bridge the gap between data providers and organizations that need data to make the world a better place.
What is the relation between DeFi and blockchain?
Enter the answer in DeFi and blockchain are interwoven. DeFi cannot exist without blockchain. Decentralized Finance is built upon blockchain networks. This ecosystem of financial applications allows users to have complete control over their assets. Users can interact with the ecosystem using peer-to-peer decentralized applications (DApps).
What is the relationship between DeFi and Staking?
Staking is not just one aspect of the DeFi ecosystem that is growing very rapidly, it is also among the latest trending topics in the crypto industry. Staking is exclusive to the crypto community and has to do with crypto owners locking their assets to receive rewards. This debt mechanism depends on DeFi to excel. Similar to conventional banks, DeFi makes it possible for people to borrow by using their crypto assets as collateral.
Who is Investing in DeFi?
Just about anyone can invest in DeFi and for different reasons. Using the blockchain technology, DeFi will allow you to enjoy all the regular financial services, only this time no third party is involved. DeFi technology makes possible the creation of smart contracts with codes that facilitate managing and accepting deposits, liquidating collateral assets, handling collateralized loans and so much more under the contract terms should there be a fluctuation in their values.