Decentralized Finance (DeFi) Projects Are Here to Stay, Don’t Miss Out
What is DeFi?
DeFi, Decentralized Finance, is a term used to describe an open and independent financial system. The inspiration for DeFi is blockchain – the technology behind cryptocurrencies.
The financial system offers an alternative to the existing financial system because DeFi is not centralized and it is not controlled by a single entity. As a result, it claims to offer more transparency, scalability, and security compared to traditional finance.
DeFi allows everyone to borrow, invest, save, trade, and do almost anything related to modern finance. Since it is open-source, anyone with access to the Internet can build a financial product and offer a range of services.
DeFi vs. Traditional Finance
The need for decentralized financial products and services emerged from restrictions and inherent complications in the existing financial framework. DeFi experts realized that the current system limits and regulates access to valuable financial products to millions of users around the world.
Due to these traditional limitations:
- Thousands of people can’t open a bank account.
- The financial entity in charge of transactions may block accounts for no apparent reason.
- Personal data and other important information can be hacked and shared with others.
- Markets can be closed at will causing financial loss to traders and stakeholders.
- Financial transactions are delayed due to human error.
- Banks and other intermediaries charge hefty fees and commissions.
Decentralized Finance Development is the answer to these and similar problems. Developing a DeFi project using the decentralized concept will allow everyone in the world to take advantage of cutting-edge financial products irrespective of geographical constraints.
Benefits of Decentralized Finance
DeFi is often described as finance for the people, by the people. The transparent and open nature of DeFi projects is enticing to both the business owners and end-users because it benefits them both.
The user is in full control of the transaction. Due to the decentralized nature of the network, transactions are anonymous and tamper-proof. As a result, no one can revoke user rights. Overall, the entire network is transparent because each transaction is visible to everyone else.
DeFi Use Cases
DeFi protocols are defining the future of a decentralized financial world. Billions of dollars are locked up in Ethereum-based (and other blockchains) DeFi protocols alone. To give you a brief insight, here are just a few of many successful DeFi use cases:
Asset Management: DeFi protocols let users control their assets without depending on banks and governments. Crypto wallets such as MetaMask allow the user to easily buy and sell anything on the decentralized crypto universe. Users have full control of assets because they can store seed phrase, private keys, and passwords on a local device.
Data & Analytics: LoanScan, DeFi Pulse, Stablecoin Index, and Ox Tracker are examples of apps that analyze patterns in DeFi data to help investors make better decisions. Users can easily analyze risk, yield, and liquidity locked in DeFi protocols.
Insurance: Investing is always a risky proposition. Therefore, Nexus Mutual and Polkadot blockchain help users get insured against unintended smart contract code use, failures, and breaches.
DEXs: Decentralized exchanges operate a cryptocurrency platform without a central authority. This peer-to-peer transaction model protects members from price manipulation and theft. Token projects benefit from DEX by getting access to liquidity similar to that of a centralized exchange but without any listing fee.
Identity: DeFi ecosystem offers people access to extra funds who don’t have proof of creditworthiness such as homeownership and income. The collateral requirement is based on attributes of financial activity and reputation.
Payments: The peer-to-peer payment systems created by various DeFi projects allow millions of people to access financial instruments. In the future, these payment systems are poised to form the backbone of retail and wholesale business infrastructure.
Predictions Markets: DeFi Prime, Augur, and CoinDesk are just a few of several platforms that let users benefit from predicting the outcome of the election, sports, and major economic events. The combined intuition of the crowd becomes the market price.
Developing Your Own DeFi Project – Business Idea
You can develop your own DeFi project by launching a DeFi token. DeFi tokens have different use cases as seen previously. To launch a token, you will need a business idea, a blockchain platform to launch a token and a technical partner for creating DeFi apps.
The easiest way to come out with a suitable business idea is to recreate a traditional financial instrument. Before creating the project, it’s important to analyze the demand for the product. Financial instruments that have low user satisfaction are a good option. A successful DeFi token will have minimum competition and a reasonable cost to launch.
Before diving into the project, you will need a suitable platform to run your services. For this purpose, you may select Ethereum, Tron, Waves, Tezos, Binance Smart Chain, and EOS. While there are plenty of other options but these are some time-tested platforms that are very popular for developing a DeFi project.
Finding dApp Developers
The backend code of the dApp runs on a decentralized peer-to-peer network. A development company like Chetu can assist you in creating a DeFi app in the right blockchain platform in order to deliver the DeFi solution you seek to provide.
It’s Your Call
The unprecedented growth of the DeFi is set to revolutionize the world of finance. It will certainly make a huge impact on lending and borrowing, which will ultimately enable everyone in the world to access the best financial services. In the future, decentralized banking and elimination of intermediaries is set to give power to the people.
The time is ripe for DeFi development. Anyone interested in developing DeFi project can hire Chetu to hire developers and create DeFi projects. The US-based multinational company has over 2000 skilled software developers who have experience in offering blockchain development services according to the exact specifications of its clients.