The evolution of Decentralized Finance (DeFi) as made traditional finance secret come to open and position many crypto enthusiasts in the right stand to earn passive income through their investment. The reality about DeFi is simplified through major features attached to this system making transaction decentralized with no need for third parties intervention.
When considering staking and lending which is the key aspect of DeFi, the total locked in USD as far as DeFi is concerned is over 16B USD as at the time of writing this article which shows that DeFi staking is growing every day.
In DeFi, Decentralized Autonomous Organization and Governance is very important and having a clear understanding of these two will help in the journey of Decentralization.
Governance, as it applies to DeFi, has to do with organization management which goes side by side with Voting features. There are many decisions that required agreement before the bill can be pass for general adoption, which means there will be an item, tool, or asset used to carry out this exercise. Theirs comes Governance Token.
Coinmarketcap explained Governance Token as tokens that developers create to allow token holders to help shape the future of a protocol.
Note: Not all ERC20 Tokens are Governance Token
$OM Token a utility token for MANTRADAO project is a governance token as a case study!
As DeFi hype by crypto enthusiasts, DAO and Governance tokens are now getting the respect they deserve, due to the fact that governance token is the backbone of DAO and token holding such token has the democratic say in future of the protocol that owns such token and can participate in distributed ownership model that hedges against traditional centralized organizations that do not have the ability for community governance. This is amazing!
MANTRA DAO established three major ways of generating governance structures in DeFi ecosystem which absolutely make the financial service much better.
Open ecosystem is a concern for MANTRA. There are many DeFi projects rendering better rates of interest for there users in other to attract more people to the decentralized space since interest rates with DeFi are much better compared to the traditional market and to keep the DeFi market on its pace, there is need for connectivity between DeFi service providers and work together to ensure that the interest rates remain competitive. The transfer of assets from different blockchain is only achievable if such DeFi project is making use of this function and protocol for its operation and since MANTRA concern is Open finance with an interoperable chain as its calls, the decision to build on RioChain and become part of Polkadot's substrate program came in being, which gives MANTRA ability to provide its unique mix of cross-chain staking, lending, and governance in the Polkadot ecosystem since RioChain has the capability to act as a bridge for cross-chain assets. This transaction is not only focusing on crypto assets (digital assets) but works for traditional finance also.
The governance aspect of the interoperable chain comes in as the users will be able to stake across more tokens and pools, and presently MANTRA has (UNI) OM/ETH Liquidity pool, which provides deeper liquidity and lower volatility. There are more products to follow this function as MANTRA progress with the roadmap.
Many DeFi projects are not full decentralized because some of their major products are not open. Yes, DeFi is also known as Open Finance, there are closed technology platforms and getting the history and development procedures of such a project is not open to the public/community members.
MANTRA DAO leverages on the wisdom of the crowd to create a community-governed, transparent, and decentralized ecosystem for web 3.0, which means the governance design of MANTRA is open and creators reach a consensus by following the community member suggestions and recommendation.
As holder of $OM token, voting on a proposal made easy, decide on setting of interest rates, inflation rate, and grant allocations to mention but few.
Overcollateralized lending products is one of the DeFi current products that users enjoys which gives then opportunity to borrow crypto assets if they have collateral to cover there borrowing. DeFi lending program is growing to the level of accessing this function under collateralized lending remember this feature is available in traditional finance and its called a credit score, where a third party intermediary determines your creditworthiness based on their evaluation criteria such as income and debt.
MANTRA has introduced traditional credit scores is known as Karma, which will play a vital role in the ecosystem as a reputation mechanism. Karma will be accrued by performing activities such as staking tokens, taking and repaying overcollateralized loans, governance participation such as voting on proposals, joining the MANTRA pool, and more. As users earn KARMA, they benefit from higher staking rewards and lower borrowing rates, further increasing DeFi’s usage and potential.
In conclusion, MANTRA DAO is not a platform that set aside for staking, lending, and governance only though these are the key features of the organization but there are products that attached to this great projects which attract passive income to those that pay close attention. The more you follow MANTRA DAO announcement and information, the more you get those opportunities that attached to the project.
For Futher information visit: https://mantradao.com
How MANTRA DAO Plans To Build A Decentralized Governance Model of the Future
Disclaimer: I am not a financial adviser!