{"id":2851,"date":"2020-11-04T12:35:06","date_gmt":"2020-11-04T12:35:06","guid":{"rendered":"https:\/\/timestampmag.com\/?p=2851"},"modified":"2020-11-03T21:45:47","modified_gmt":"2020-11-03T21:45:47","slug":"the-defi-revolution-will-not-be-televised","status":"publish","type":"post","link":"https:\/\/timestampmag.com\/2020\/11\/04\/the-defi-revolution-will-not-be-televised\/","title":{"rendered":"The DeFi Revolution Will Not Be Televised"},"content":{"rendered":"<ul>\n<li><strong><a href=\"https:\/\/timestampmag.com\/2020\/05\/06\/an-introduction-to-defi\/\">The creation of Defi allows users to take part in financial services under their terms<\/a><\/strong><\/li>\n<li style=\"font-weight: 400;\"><strong>An open alternative to classic financial services such as savings accounts, insurance, loans, and trading operating outside the rigid framework of typical institutions<\/strong><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The concept of DeFi, short for Decentralized Finance, has resulted in the development of some of the most disruptive technologies in the realm of finance. Emulating traditional financial services but operating with its fundamental premise decentralization.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Defi&#8217;s intrigue is evident, an open alternative to classic financial services such as savings accounts, insurance, loans, and trading operating outside the rigid framework of typical institutions. With no central authority controlling its operation, Decentralized Finance brings change to a system riddled with fees, non-transparency, and economic discrimination.\u00a0<\/span><\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-2853 size-full\" src=\"https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image3-1.png\" alt=\"defi\" width=\"1999\" height=\"1333\" srcset=\"https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image3-1.png 1999w, https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image3-1-300x200.png 300w, https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image3-1-1024x683.png 1024w, https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image3-1-768x512.png 768w, https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image3-1-1536x1024.png 1536w\" sizes=\"(max-width: 1999px) 100vw, 1999px\" \/><\/p>\n<h2><b>DeFi Vs CeFi (Centralized)<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">DeFi often operates on the popular composable platform Ethereum. Users are implementing smart contracts to enforce &amp; execute protocols on the blockchain in place of customary intermediaries such as banks or lawyers.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These DeFi applications or <\/span><a href=\"https:\/\/www.securities.io\/what-are-dapps-decentralized-applications\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">(Dapps)<\/span><\/a><span style=\"font-weight: 400;\"> are borderless, immutable, and can be participated in while operating with little to no human intervention.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The advantages of a decentralized service stem from its interoperability and transparency.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Users can build Dapps by combining different DeFi products like Lego pieces.<\/span><a href=\"https:\/\/www.coindesk.com\/tag\/stablecoins\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\"> Stable coins <\/span><\/a><span style=\"font-weight: 400;\">such as <\/span><a href=\"https:\/\/tether.to\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Tether(USDT)<\/span><\/a><span style=\"font-weight: 400;\">, a currency pegged to a real-world asset like USD, are an example of this interoperability, encouraging co-operation and improved Dapps.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Conversely, a typical protocol from a traditional financial institution is set by one group or business, a decision usually made behind closed doors where the institution&#8217;s intentions may not be as transparent or user friendly.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Dapps are borderless whether, in Toronto or Tokyo, one would have access to the same services and networks regardless of location. Local regulations may apply; however, most services are available wherever there is an internet connection.\u00a0<\/span><\/p>\n<h2><b>Power to the People<\/b><\/h2>\n<p><a href=\"https:\/\/timestampmag.com\/2020\/05\/06\/an-introduction-to-defi\/\"><span style=\"font-weight: 400;\">The creation of Defi allows users to take part in financial services under their terms.\u00a0<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400;\">From Decentralized exchanges to insurance, to lending, DeFi has improved these services more efficiently with broad market potential while being more inexpensive than established practices.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Typically lending Fiat currency has many entry barriers such as ID verification, account creation, and long wait times for transactions, all verified through a centralized medium that charges fees.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Decentralized platforms take away the need for these formalities due to the implementation of Smart Contracts. These contracts are pieces of code that can be executed automatically in a\u00a0 deterministic way. They can receive, store, and send funds. Thus removing the need for human decision making and trusting intermediaries.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In a traditional sense, an individual contract would have to be executed individually, with each user meeting the requirements of that agreement in terms of cost or fees. Smart contracts are reusable.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Uses have varied from payments to finance to crowdfunding. The <\/span><a href=\"https:\/\/defimarketcap.io\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">most popular DeFi Token is the Wrapped BTC <\/span><\/a><span style=\"font-weight: 400;\">with a <a href=\"https:\/\/timestampmag.com\/tag\/crypto-market-cap\/\">Market cap<\/a> of an estimated 1.65 billion.<\/span><\/p>\n<p><img decoding=\"async\" class=\"aligncenter wp-image-2855 size-full\" src=\"https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image2-2.png\" alt=\"defi revolution\" width=\"1999\" height=\"1333\" srcset=\"https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image2-2.png 1999w, https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image2-2-300x200.png 300w, https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image2-2-1024x683.png 1024w, https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image2-2-768x512.png 768w, https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image2-2-1536x1024.png 1536w\" sizes=\"(max-width: 1999px) 100vw, 1999px\" \/><\/p>\n<h2><b>Lending \/ Borrowing disruption<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Defi permits a user to systematically take out a loan without traditional reviews, credit checks, or even a bank account. In some cases, the lender is the smart contract, and the algorithm calculates APY\/interest rates. In other applications, platforms can guarantee a fixed interest rate in exchange for loaning your <a href=\"https:\/\/timestampmag.com\/tag\/crypto-asset\/\">crypto asset<\/a>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Small lenders must face intermediaries with high costs &amp; fees. The peer to peer model eliminates those fees making it more cost-efficient. Defi Lending also has benefits in terms of returns to the lender. Typical Fiat savings accounts barely accrue up to 1% APY yield farming can offer up to 40% or even higher returns monthly.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Defi Also breaks down walls for the financially discriminated borrowers. <\/span><a href=\"https:\/\/globalfindex.worldbank.org\/sites\/globalfindex\/files\/chapters\/2017%20Findex%20full%20report_chapter2.pdf\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">1.7 Billion people do not have access to a traditional bank account or financial institution.\u00a0<\/span><\/a><\/p>\n<h3><b>Where does this take place?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Platforms such as<\/span><a href=\"https:\/\/blockfi.com\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\"> BlockFi<\/span><\/a><span style=\"font-weight: 400;\"> &amp; <\/span><a href=\"https:\/\/celsius.network\/borrow-dollars-using-crypto-as-collateral\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Celsius<\/span><\/a><span style=\"font-weight: 400;\"> are popular platforms for borrowing\/lending crypto assets. <\/span><span style=\"font-weight: 400;\">Blockfi offers up to 8.6%APY for Tether (USDT) plus compounding interest every month. There is a stipulation of 1 free monthly withdrawal, and after that, there is a flat fee.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Celsius offers a similar platform for over 25 assets ranging from 3.43%APY <\/span><a href=\"https:\/\/kyber.network\/about\/knc?__cf_chl_jschl_tk__=3ab01bc3ee040af859370213cfff1621bb33d63d-1601974480-0-AY-5InARare0CTGMo3_nKaSCxPzkb-vB8WIPMAhe1ci3pjbVu17NgQbbrnR7_-B819wdnAltAPpAypgHkzOVKNzaL33ZNE8IWxcZVc4RSriBsk7W2ExZ1J3Jyzx__CRH-Rc1EWVcDzy4BQ3r0k16wH7ydvIKIVVMrGFwBkNQigKCz1gPWuj8R33T77DLlg1QVGlCkHrX8nqBdSniWglNJQflFWEGfWpNWPBo9wMpvl9rdCePj5GAbqXz6dylUbMQzwiQPQFU0DwixwvVIoKUuVhX_rHn8GwtkGkc_02xEKEW8ebNmaJBhaNrIFz7-Euqq3JHRLXN_MuR6VG1QJeSfwZPz_SoxWOeNsofTqaebrzC\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Kyber (KNC)<\/span><\/a><span style=\"font-weight: 400;\"> to 22.40% APY on <\/span><a href=\"https:\/\/www.synthetix.io\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Synthetix Network token (SNX)<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Conversely, Borrowers can use Crypto-assets as collateral for much less than a traditional lending institution with APR starting at 0.7%. More cost-effective and more efficient than a bank.<\/span><\/p>\n<p><img decoding=\"async\" class=\"aligncenter wp-image-2856 size-full\" src=\"https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image5-1.png\" alt=\"defi revolution\" width=\"2000\" height=\"1500\" srcset=\"https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image5-1.png 2000w, https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image5-1-300x225.png 300w, https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image5-1-1024x768.png 1024w, https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image5-1-768x576.png 768w, https:\/\/timestampmag.com\/wp-content\/uploads\/2020\/10\/image5-1-1536x1152.png 1536w\" sizes=\"(max-width: 2000px) 100vw, 2000px\" \/><\/p>\n<h2><b>All that glitters may not be Gold<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">With all the glamour and possibilities surrounding Defi, like anything, it is not without its risks.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Like any technological advancement, it is subject to hackers and bugs within protocols. <\/span><a href=\"https:\/\/www.coindesk.com\/understanding-dao-hack-journalists\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">In June 2016, The DAO was hacked for roughly $50 million<\/span><\/a><span style=\"font-weight: 400;\">. It is also essential to know the level of decentralization of the contract and the shutdown procedure if something were to happen.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Liquidation can also be an issue if the asset begins to spiral downwards in value and protocols can be altered to no longer perform the intended stipulation.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The creation of Defi allows users to take part in financial services under their terms An open alternative to classic financial services such as savings accounts, insurance, loans, and trading operating outside the rigid framework of typical institutions The concept of DeFi, short for Decentralized Finance, has resulted in the development of some of the [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":2798,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[2,387,4,39,386,152,104,388,240,33],"_links":{"self":[{"href":"https:\/\/timestampmag.com\/wp-json\/wp\/v2\/posts\/2851"}],"collection":[{"href":"https:\/\/timestampmag.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/timestampmag.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/timestampmag.com\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/timestampmag.com\/wp-json\/wp\/v2\/comments?post=2851"}],"version-history":[{"count":2,"href":"https:\/\/timestampmag.com\/wp-json\/wp\/v2\/posts\/2851\/revisions"}],"predecessor-version":[{"id":2898,"href":"https:\/\/timestampmag.com\/wp-json\/wp\/v2\/posts\/2851\/revisions\/2898"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/timestampmag.com\/wp-json\/wp\/v2\/media\/2798"}],"wp:attachment":[{"href":"https:\/\/timestampmag.com\/wp-json\/wp\/v2\/media?parent=2851"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/timestampmag.com\/wp-json\/wp\/v2\/categories?post=2851"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/timestampmag.com\/wp-json\/wp\/v2\/tags?post=2851"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}