Put your crypts to work: what are decentralized finances

By Exe8422 | Criptonoticias | 22 Jul 2019


It is known as DeFi, a short version of Decentralized Finance, to the new ecosystem of decentralized financial services. Currently, some of the most successful applications developed on Ethereum and other public blockchains are focused on this kind of services. Platforms such as DAI, Compound, 0x, Augur, Dharma and even Bitcoin's Lightning network offer ways to generate income by investing different crypto-assets to make them available to other users.

Traditional financial services are centralized, limited by geographical borders, are not available to anyone, lack transparency and do not take advantage of the opportunities that arise today from interconnection with other platforms. This implies higher costs and risks for users, who suffer the impact on the performance of their investments.

In contrast, the new DeFi platforms take advantage of the public blockchains to offer a superior and global service. Anyone can participate without asking permission, they are resistant to censorship, they are programmable, transparent and do not depend on trust in third parties.

A world of options

Currently there is a wide variety of services whose market already exceeds US $ 578 million. Maker is the main player, with more than US $ 400 million in Ether deposited in the DAI intelligent contract.

In second place is Compound an open-source protocol that allows to borrow and take credits in crypto. Currently offers returns of 7% per year in DAI, 0.02% per year in ETH and also allows to lend other tokens such as USDC, BAT, REP and ZRX.

An alternative to Compound is Dharma, a similar platform that only allows DAI or USDC, but has better performance.

There are also more interesting and innovative options such as Augur, a decentralized prediction market. Using your platform, any person (or robot) can choose an event in the world, be it the price increase of a cryptoactive or the presidential elections, and bet Ether for or against its result. This also serves as a source of reliable information, since the people who investigate the facts and predict their success will be financially rewarded. Now, for example, the prediction of the result of the football match between Argentina and Brazil in the framework of the Copa América is open. 52% of the funds bet on Brazil, 21.7% on Argentina and the rest expect a draw.

To find information about the current DeFi platform market, there is the DeFi Pulse portal.

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