The Post-Fintech Revolution: Understanding DeFi Applications
January 26 2022 - 12:11PM
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Fintech, defined by technologies meant to empower the masses
through the ubiquitization of financial services, has failed. In a
world of record wealth inequality, it has served only to further
enrich the already powerful – the bankers, the politicians, and the
insiders. Meanwhile, everyday people are alienated, left hopeless
in regards to their financial futures. Through stagnant wages and
rising prices, those lucky enough to participate in the system
watch their quality of life erode. For the majority of the world,
those without any access to financial services whatsoever, even
first-world givens such as stable pay and housing are distant
privileges. It is clear that a new system is needed, one free of
centralized control and power — one in which the people hold their
financial futures in their own hands. The DeFi Revolution DeFi, or
Decentralized Finance, is a new financial system that is being
built by decentralized networks of individuals that have decided to
provide financial services directly to each other. Cryptocurrency
technologies such as blockchains and smart contracts enable DeFi
platforms to operate trustlessly – financial agreements are
enforced by code instead of centralized authorities like banks, or
middle-men like escrow agencies. Thanks to trustlessness, DeFi
platforms can provide innovative and fairer financial services to
all: Staking is the act of locking up one’s tokens to validate
transactions in a cryptocurrency network, in return earning a
reward that typically ranges in the 5%-15% APR range, much higher
than the 0.01% APR average provided by traditional savings
accounts. Decentralized exchanges allow users to anonymously
purchase cryptocurrencies. Decentralized exchanges built using the
latest DeFi protocols also allow users to purchase tokenized shares
of stocks. Decentralized exchanges depend on users to provide
liquidity. Users can do so by depositing pairs of tokens that can
be used by others to perform swaps. This process is called
liquidity mining, and can offer APR rewards in the hundreds of
percentage points. Decentralized loan platforms eliminate
counterparty risk through smart contracts and
over-collateralization, allowing lenders and borrowers to cooperate
without middle-men. The lack of middle-men eliminates the need for
records of creditworthiness, and ensures that rates are fair for
all parties. Together, these services replace the old and
inefficient forms of saving, investing, trading, and financing.
Further, because they are decentralized and trustless, access to
these services is open to all. Decentralized finance does not
discriminate against anybody. Users safely cooperate without
knowledge of each others’ identities, free of bias. Though its
potential is limitless, DeFi has not yet reached mass adoption.
This is largely due to three factors: a lack of public awareness, a
lack of understandable educational content, and poor
user-friendliness on the side of most DeFi platforms. DeFiChain, a
DeFi platform that is dedicated to creating financial services that
are accessible to everyone, is solving these issues. DeFiChain
provides solutions that are easy to use, such as their all-in-one
DeFi mobile app, which enables users to transact, liquidity mine,
and trade both cryptocurrencies and shares.
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