Ethereum, the DeFi King

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Avatar for cryptoking1514
3 years ago

Ethereum bring a lot of innovation to the crypto space,  it still do nowdays, an important evolution of the last two years is the so called DeFi Decentralized Finance, with this term we put together a lot of subject that have different business, than before start to put together some interesting numbers we better understand what the DeFi do.

The first category is the lending, this kind of companies lend you money with a collateral that you need to give them, this business is widely used for leveraging your investments or trade on short term  operation, it came that this practice is not immune to risk, as we saw during the last downtrend on February and march this lending business can go to the wrong direction and need to margin call your collateral asset.

In any case just the most skilled people may try to use this leverage investment.

Another DeFi business are the so called DEX decentralized exchange, this innovation starting to be used by many, the pro is that you keep your key and also your money on private wallet, the cons is that you usually don’t have the liquidity you find on bigger exchanges than you may not always find the best price execution.

If you are a small investor this factor may not be very important but if you buy and sell big quantity of asset you may find some difficulty to execute all your sale on one single price, the risk is to buy or sell at a higher or lower price.

Another business is the derivates market, this market is the most dangerous for novice trader and even an experienced one can lose a big chunk of him investment.

There are also the so called “asset” business, one example is the wBTC that is an ERC20 asset that own Bitcoin, basically the use of this asset class is to bridge between the two main cryptocurrency, there may be other kind of use but honestly I never try this kind of asset than I have not a lot of useful information about that.

 

The Numbers

Now that we know the main utility of this group of business we can take a look at the numbers, according to stateofthedapp.com till April we have 337 Dapps on DeFi category, this is mean that the number is still pretty low compared the 3436 total Dapps tracked by the site, anyway we may notice the fast adoption of this kind of apps.

The main Dapp are on games (618 apps in total), gambling (534 apps) and social (369 apps), only at the forth place we find the finance sector… anyway my personal bet is that in a year the adoption would be bigger than today.

Looking closer we also can see that Ethereum powered 307 apps (out of 337 total Dapp), this number make Ethereum the king of the DeFi.

Experts say that the advantage of the decentralization is the permissionless system and the immediate access of the service, we may notice that there is an advantage in term of cost, let’s compared this kind of service with the ones of the traditional banks, we will discovered that the cost factor is a big barrier, another barrier is the minimum investment that can exclude small investor to operate with traditional banks.

 

Main Dapps

Among the most used Dapps we can mention just few of them, MakerDAO is a decentralized lending protocol that locked around 487 millions Dollar, the DCP (Decentralized Debt Position) help generate DAI the currency pegged to the Dollar, users can deposit ETH BAT and USDC as collateral for the creation of DAI.

Synthetix is a decentralized investment platform that help the user to create a syntetic asset that represent real goods like a stock, gold or another cryptocurrency, this asset company have almost 115 million Dollar in syntetic asset.

Uniswap is a decentralized exchange protocol that help usesrs to exchange ERC20 token in a secure and private manner.

WBTC is a wrapped Bitcoin and it act as a tokenized version of Bitcoin on the ERC20 protocol, in few words every wBTC is pegged by a Bitcoin and can be used on Ethereum blockchain

 

How Ethereum can profit from this mass adoption

 

Let’s see why is important that all this DeFi services are made under Ethereum platform, been the “super leader” of this sector make Ethereum blockchain the home of the majority of the 900 plus millions Dollar locked on various DeFi services, another benefit for ETH is that a lot of stable coins was minted under this platform making Ethereum the leader of another business (the stable coin business).

More in general we may say that Ethereum is not just the king of the Dapps but the leader of the stable coin minted and the one that can make this kind of service even more profitable, useful and frictionless for the tomorrow users.

 

Thanks for reading and hope you enjoy this post

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Comments

To be candid, Ethereum has really revolutionized the cryptocurrency world. What BTC failed to do are being done by altcoins.

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3 years ago

There more scae about cryptocurrency .like url scam where havker make ad face website and clame to be the real one and trap innocent peoole

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3 years ago