DeFi on the NEAR Ecosystem
Decentralized Finance (DeFi) make up the base of NEAR Protocol. For other components like dApps to thrive, it needs DeFi. Most end users don't directly needs DeFi apps; they need it indirectly when using dApps. For example, playing a game that have a different currency, player will trade for their native tokens on Ref.Finance. Or perhaps a dApp like sweatcoin awards their users with SWEAT, but other apps don't use SWEAT, so users swap their tokens on Ref.Finance (DEX) to other native tokens. Perhaps except for investors, DeFi ease life when using the higher level dApps rather than being enticing themselves. Let's look at their use cases.
Replacement for Banks and other Entities
Today, we have various services like banks, money lenders, etc. that helps serve other purposes. Perhaps we want to buy a house, we shall lend some money from money lenders. Maybe we have lots of money, saving them in banks makes life easier. Going to the supermarket, swiping cards are easier than paying in cash and wait for changes; which if someone counted the changes wrong, a dispute arises to be resolved. These just makes our life so much easier! What's its equivalent in crypto?
As you guessed, it's DeFi. It's the first thing that an ecosystem needs to build before other stuffs like dApps could thrive. Without it, token exchanges would be impossible. If token can't be exchanged for another token, it would have limited use cases, and its value will start dropping. In fact, every single coin that independent of one another would start dropping, if it can't be exchanged for other assets. For inter-chain exchanges, we have DEX (Decentralized Exchanges) like Ref.Finance or Skyward Finance, where we could swap NEP-141 tokens (i.e. tokens building on NEAR Protocol). To swap cross-chain, such as to Ethereum, we use the Rainbow Bridge.
As for borrowing assets, markets like Aurigami and Burrow does the same. Albeit, it makes life even easier without requiring going to the banks and go through painful steps before money is borrowed. Everything is defined by the smart contract, that is most probably open source, and you just follow the rules defined! Violà!
Use Cases
Boca Chica is an Initial DEX Offering (IDO) Platform. Traditionally, a project requiring funds borrow money, pitch for investment, etc. Now, people whom support your project could buy native tokens, which initially have no values, with a token that have values. For example, buying DEIP with NEAR tokens. The startup defines how many NEAR tokens they need to successfully startup the project; hence they sell a small portion of their native tokens to true believers to give them a head start. Providers the project have sufficient true believers, it's much much easier than asking for investment from specific people. The crowd now fund you, not a specific company/investor. The startup is dependent on many sources, albeit true believers, than a single investor's will that most probably change over time and affect the direction of the project.
Conclusion
Seriously speaking, this article does not fully discuss the potential of DeFi. Other stuffs like stablecoins with TrueUSD or the currently rumored USN is also considered DeFi. In conclusion, most end-users (non investors) benefits from DeFi to get what they want, indirectly (including myself). Investors could use DeFi to get what they want: trading to earn money despite the risks, etc. DeFi isn't facing end-users most of the time; dApps are. DeFi is more of a backbone, a base, for other dApps to thrive in a healthy Ecosystem. I don't really care about DeFi, but one enjoys the benefits it brings (and one believes others too)!
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(As one isn't a fan of DeFi, we shall have a partial article, unlike a full blown ones that you might have read before. Visit my home page for more!)
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