The Decentralized Finance (DeFi) market is making major gains in both total value locked (TVL) and the fundamental underlying of projects within this space. Just two months ago, its TVL stood at barely $1 billion but has since grown to $2.4 billion according to DeFi Pulse stats. Much of this growth is attributed to the industry's value proposition in creating an ecosystem where anyone can easily access financial products based on the aspect of decentralized markets.
While the industry is booming, most projects are yet to achieve optimal value addition given some shortcomings in the base infrastructure. That said, the DeFi market is now seeing a change in trend as projects like PlutusDeFi debut with full-stack solutions pegged on the decentralized finance products. This initiative has taken a different approach by enabling its prospects to lock their interest across the DeFi space for long-term gains. In doing so, PlutusDeFi is optimistic of creating an ecosystem where value is retained in the DeFi ecosystem as opposed to a never-ending loop where users withdraw their crypto or fiat revenues.
The Future-Oriented DeFi Strategy
Going by the DeFi industry progress, PlutusDeFi is among the latest cutting-edge infrastructure to support financial products on a decentralized network. Its products range from lending, insurance, privacy, fiat to crypto savings bridge and a decentralized exchange. Notably, the platform's MVP product 'Lend & Earn' will enable users to choose their preferred DeFi lending protocols in a simple 3-step process.
To function effectively, the PlutusDeFi underpins value on its utility token, PLT. This native token provides an avenue to incentivize PlutusDeFi participants as well as enhance coordination towards building a sustainable DeFi ecosystem. Consequently, the PLT Defi tokens are burnt to reward Plutus token holders as adoption scales. In addition, they are the ecosystem governing tools when it comes to network fees, staking and protocol governance. As for the network fees collected, it is reverted back to tokens and distributed into 3 pools which include buy back & burn, Re-audit fund and a staking pool.
With a total supply of 120,000,000 PLT tokens, PlutusDeFi has since raised $1 million in funding in a seed and private round which saw the allocation of 50,000,000 and 10,000,000 PLT tokens, respectively. The platform implies a bridge fee model, similar to the LTO network, with a 55% burn on the seed rounds so as to retain value and avoid pumping of PLT tokens into liquid crypto markets. Basically, PlutusDeFi has made it more costly by setting a 55% transfer fee in what is compared to a dynamic lock-up mechanism. PLT seed investors, therefore, have no profit incentive to liquidate their position given the cost attributed to a conversion. However, the transfer fees are only meant to last over a period of nine months and will be on a 20% monthly reducing model such that liquidation during the final one will be charged as little as 9.2%.
Apart from the Bridge Toll, PlutusDeFi also leverages a bonding curve model to encourage more liquidation progressively. The project has come up with a hybrid model dubbed 'Bridge-Bonding Curve' which implements an exponential increasing price towards the end of PLT sale while charging high for liquidators looking to dispose seed round tokens before the sale ends. In fact, this bonding curve has already been used in the last $150k of the $1 million raised by PlutusDeFi. Once the PLT token sale is over, PlutusDeFi will further support uniswap listings within its prospectus decentralized exchange, targeting 1inch.exchange as the means to this end.
PlutusDeFi Prospects in the DeFi Market
This innovation has gained traction from varied stakeholders, having completed its main platform. It is now working on other functions such insurance and privacy integrations with London-based, Aztec Protocol and Nexus Mutual. The latest PlutusDeFi funding round saw new investors aboard with prominent names like Nabais Capital, Sean Klingosum, the Managing Partner at Torchlight Ventures, Eric Benz, CEO of Changelly and Danish Choudhury, CEO of Bitcoin.com featuring in the list.
With such backing, PlutusDeFi is looking to scale in potential markets including Africa's emerging economy. The platform is set to integrate on-ramping solutions to help users from these markets deposit their funds seamlessly. One notable method is through Kenya's M-Pesa solution which has brought high levels of financial inclusivity in East Africa. PlutusDeFi plans to facilitate these transactions through FX exchange markets and hedging with stablecoins to avoid value depreciation should a specific fiat currency plummet all of a sudden.
The DeFi market uptrend seems to be far from over as more traditional financial instruments find their way into decentralized ecosystems. While this is the case, an emphasis on DeFi efficiency ought to be given priority. Looking back, some projects such as the Lendf.me have almost gone bankrupt when the protocol was compromised and around $25 million worth of locked value was wiped out. In this case, the funds were, however, later returned averting what would have been a catastrophic loss for the project's stakeholders.
Therefore, upcoming DeFi protocols ought to be more efficient in eliminating any arbitrage opportunities through strategies like bridge tolls and bonding curves. Also, innovations should consider privacy-focused ecosystems in a bid to provide the anonymity option for interested users. Currently, this is already in play within the PlutusDeFi which intends to integrate its own privacy-mixer 'PlutusDeFi ETH bl3nd3r' and other options like the Tornado Cash. Based on its value proposition, the PlutusDeFi might as well forge a path for long-term efficiency and sustainability in the DeFi ecosystem.