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Blockchain

DeFi ain’t just about tokens, quality use-cases to overcome challenges

Decentralized finance has taken the crypto world by storm, reshaping the space.

Republished by Plato

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Blockchain technology is disrupting every sector of the global economy with its limitless opportunities and innovative products. Decentralized finance is one of the sectors that has been trying to shake the traditional financial ecosystem. The multitude of DeFi applications emerging all over the fintech space has provided solutions, such as lending, staking, exchange of derivatives, among others.

The current craze is justified, as DeFi attempts to build an alternative to the rigid banking systems. Also, government regulation (or lack thereof) and a flawed financial infrastructure have allowed DeFi projects to blossom. However, the concept of DeFi has also faced several hurdles, such as liquidity issues and everyday usability, which have prevented it from moving into the mainstream financial market. Moreover,32% of those who took part in a Blockfolio survey have no idea what DeFi is.

The DeFi market cap has exploded in the last few months, indicating the growing interest in this niche of the crypto industry. So, could this prove to be the financial revolution that the world has been waiting for?

DeFi numbers don’t lie

The latest statistics by DeFi Pulse indicate that over $7.7 billion is tied up in the DeFi market, with close to $4 billion added to the market cap in the last two months. Various DeFi projects and platforms have recorded outstanding growth. Compound, a decentralized lending protocol, has a current market cap of $540 million; however, it was only at around $100 million in mid-June.

Token Insight’s Q2 2020 report revealed that DeFi users have more than doubled from 100,000 to 230,000 since January 2020. However, industry experts are worried that the hype around these astronomical figures could be temporary because it might be based more on speculation rather than the use case application of DeFi products. Johnson Xu, the head of research at TokenInsight, told Cointelegraph:

“In the short term, the high-interest rate and the incentivized liquidity mining mechanism has created a hype in the space, which directly pushes up the DeFi market, resulting in a speculative push in the DeFi space. Without any further applications and use cases to be created in order to accrue meaningful value within the space, we believe the recent DeFi hype could be short-lived.”

Overall, there’s a number of factors in the DeFi ecosystem that are contributing to the radical growth of decentralized finance.

Defi tokens

DeFi tokens are the craze right now in the crypto space, with new projects seeking to offer value to crypto users. According to DeFi Pulse’s token list, there are a variety of projects, most of which offer their native tokens. The increased adoption of DeFi products derives from the purchase of these tokens, especially those intended for lending and borrowing, such as Compound’s COMP token and Aave’s LEND.

Lending calls the shots when it comes to the rampant adoption of DeFi products. And rightfully so since the crypto loan industry is well past the $10-billion mark. Debt is an integral part of the financial economy, which is the driving force behind the increasing adoption of DeFi loan products. There’s also the benefit of earning interest for people on DeFi lending protocols. Vadim Koleoshkin, the chief operating officer of Zerion — a DeFi interface — told Cointelegraph:

“Lending is one of the easiest to understand financial instruments in the DeFi space. It promises to earn passive income on your assets protected by the collateral of debtors. Other products like AMM pools (Uniswap, Balancer, Mooniswap, Bancor), trading strategies (TokenSets, Melonport) or yield farming all have way more risks associated with both market conditions and complex smart contracts. However, even lending may not be 100% secure.”

DEXs surge in popularity

Since decentralized exchanges eliminate the need for middlemen, their popularity has increased steadily over the last few months. Decentralized platforms such as Curve, Uniswap and Bancor have recorded phenomenal growth. Uniswap’s daily trading volume recently surpassed that of Coinbase Pro since most of its operations are automated.

Increased liquidity and security of DEXs have made DeFi attractive, which has enhanced its adoption. These exchanges are finally seeing some remarkable volume as they ride the Defi mania.

Decentralized prediction markets and insurance

DeFi products are also being used by people to bet on or predict certain outcomes. Platforms such as Augur have attracted a large number of investors. At the moment, these DeFi platforms are used by investors to protect their assets against smart contract bugs. However, in the future, such products will expand into vehicle and natural disaster insurance.

The DeFi token economy is robust and has been thriving due to its incentivized structure that encourages market participation. Right now, one of the hottest tickets on the DeFi market is Compound’s COMP governance token, which has taken the idea of liquidity mining to a whole new level. With yield farming and staking, investors hope to reap the benefits by having COMP tokens, which allow them to make returns from different portfolios. Despite this, yield farming entails risks, as recently pointed out by Ethereum co-founder Vitalik Buterin.

Currently, lending protocol Aave is giving MakerDAO a run for its money since the latter is the king of the DeFi token market. LEND now holds the top position in the DeFi token list with the highest total volume locked. Additionally, governance tokens give investors the power to determine protocol changes, which may spell doom since most tokens are currently controlled by a handful of whales. That said, buying DeFi tokens can’t be compared to the 2017 ICO craze because most of the projects already have live products.

Related: Alt season is here? DeFi tokens taking on Bitcoin for crypto dominance

While DeFi tokens are an integral part of disrupting the financial sector, other key market makers have been slowly and steadily redefining the finance world. Platforms such as Uniswap provide the DeFi ecosystem with innovative mechanisms such as automated market making, which settles trade automatically. Others, like Augur, are based on a prediction protocol that lets you vote on event outcomes.

Challenges before going mainstream

Despite the buzz around DeFi, this niche of the crypto industry is still in its infancy, and there are still several things that have to be addressed before DeFi can move from its novice stage into a full-blown financial market shaper. A key concern regarding DeFi products is the vulnerability that comes with smart contracts. A case in point is the attack on the bZx protocol in March where a hacker took advantage of the system’s flash loans feature to exploit a flaw in the program. Buterin noted during a podcast episode of Unchained: “A lot of people are underestimating smart contract risk.”

Since most DeFi contracts are built on the Ethereum blockchain, the network’s high fees are a major challenge to the uptake of products. Responding to this issue, Koleoshkin noted: “DeFi allows you to access a range of financial products from anywhere in the world, but it is accessible to the people ready to pay tens of U.S. dollars for each operation.”

There’s also a major concern that the latest craze of yield farming is sending the wrong message about decentralized finance. The high-interest rates that are being offered could blind parties to the systematic risks facing the lending protocols. The focus should shift to other building blocks of the DeFi ecosystem, such as oracles for prediction markets, synthetic tokens and decentralized exchanges.

Improving the usability of DeFi products is necessary to make them intuitive and enjoyable for users. The protection and privacy of data, as well as addressing the issue of liquidity, should be the main focus of DeFi protocols to prevent loss of funds.

Additionally, ideas such assustainable liquidity mining models will help cushion DeFi products from the effects of price volatility. The DeFi ecosystem also needs to solve the issue of interoperability among the networks to help drive adoption. For improved usability and liquidity, every smart contract and decentralized application should interact seamlessly with each other. Koleoshkin noted:

“The whole market is a playground for financial geeks who are way more comfortable to manage their wealth on their own rather than open a brokerage account. Still, the DeFi space is very fragmented, and there are many gaps in the market infrastructure that increase development and maintenance costs.”

Source: https://cointelegraph.com/news/defi-ain-t-just-about-tokens-quality-use-cases-to-overcome-challenges

Blockchain

ConsenSys-Backed Virtue Poker to be Launched on Superstarter, SuperFarm’s Launchpad

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Virtue Poker, the decentralized poker platform built on top of the Ethereum blockchain, will hold an initial DEX offering (IDO) on SuperStarter. The announcement follows a successful round in which VP closed funding worth $5 million.

Virtue Poker to Hold an IDO

Founded in 2016 within ConsenSys, Virtue Poker is an Ethereum-based decentralized poker platform enabling peer-to-peer networking aiming to operate as an “online poker site that’s safe, honest, and fund.”

After a few years of development, the project announced the upcoming IDO in a press release shared with CryptoPotato earlier. The statement reads that VP has partnered with SuperFarm’s recently released launchpad SuperStarter.

Apart from handling the IDO procedures, SuperFarm will be involved in other initiatives following the event, such as integrating non-fungible tokens into Virtue Poker.

“We are excited to be helping spread NFT adoption to new types of ecosystems and use cases. Virtue Poker makes for an excellent partner for our recently introduced SuperStarter platform, showcasing its enormous benefits to the SuperFam community and the high caliber of projects wishing to integrate NFTs in their stack.” – commented Elliot Wainmann – Founder of SuperFarm.

According to the announcement, VP will put a small portion of its native coin (VPP) for sale on SuperStarter. Future token holders can stake their assets to run Justice Nodes and earn 50% of the platform’s fees.

Additionally, they will access marketing initiatives, save on fees, and “shape the development of the Virtue Poker platform.”

Ryan Gittleson, Founder and CEO of VP, noted that his project was built on Ethereum because the latter enables the creation of a “provably fair and easy-to-access poker platform,” which could be “revolutionary for the multi-billion-dollar online poker industry.”

Securing $5M Funding

Before the IDO announcement, Virtue Poker completed a strategic investment round of $5 million in April 2021. Apart from Consensys, other prominent names that took part included Pantera Capital and DFG Group.

Furthermore, the statement highlighted that the Poker Hall of Famer Phil Ivey is a stakeholder and a spokesperson for the project.

Virtue Poker also touched upon the license it received from the Malta Gaming Authority. After working together for “nearly two years in establishing a regulatory framework,” VP became the “first and only blockchain-based company” to receive such a license from MGA.

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Source: https://cryptopotato.com/consensys-backed-virtue-poker-to-be-launched-on-superstarter-superfarms-launchpad/

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Blockchain

MoneyGram to Enable Users to Buy Bitcoin and Withdraw it From Birck-and-Mortar Locations

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In yet another move of further Bitcoin adoption, the American money transfer giant, MoneyGram, will allow users to buy and withdraw bitcoins from various brick-and-mortar locations.

  • Cryptocurrencies continue to occupy the center stage of the fintech industry following a massive rally in both prices and popularity.
  • Plenty of blue-chip and publicly traded companies have begun accepting bitcoins for their services, and some have even added it to their balance sheet, Tesla and MicroStrategy included.
  • Now, it appears that the latest company to jump on the bandwagon with a move towards serious mass adoption is MoneyGram.
  • The money transfer mogul has partnered up with the cryptocurrency exchange Coinme.
  • The fruit of this collaboration is a feature that allows people to buy bitcoin and withdraw it from brick-and-mortar locations within the US.
  • According to a CNBC report, in the coming weeks, existing and new Coinme users will be able to buy crypto with cash and withdraw it from MoneyGram’s conventional locations.
  • Speaking on the matter was Alex Holmes, MoneyGram’s CEO and Chairman, who said:

This innovative partnership opens our business to an entirely new customer segment as we are the first to pioneer a crypto-to-cash model by building a bridge with Coinme to connect bitcoin to local fiat currency.

  • The move comes soon after PayPal made its foray into the market, allowing millions of merchants to accept crypto for payments.
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Source: https://cryptopotato.com/moneygram-to-enable-users-to-buy-bitcoin-and-withdraw-it-from-birck-and-mortar-locations/

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Blockchain

Craig Wright Allowed to Serve 16 Bitcoin Developers Over $4B of Stolen BTC

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Craig Wright’s legal attempts to sue a dozen developers working on the networks of Bitcoin, Bitcoin Cash, Bitcoin Cash ABC, and Bitcoin SV have been approved. By tapping a law firm called ONTIER, the self-proclaimed Satoshi Nakamoto will go after the developers to make them recover over $4 billion of BTC supposedly stolen from his computer last year.

CSW Granted Permission to Go After Bitcoin Developers

CryptoPotato reported in late February when Wright and ONTIER announced plans to pursue legal action against the developers of Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin SV (BSV), and Bitcoin Cash ABC (BCH ABC).

The firm acted on behalf of Tulip Trading Limited (TTL) – a Seychelles-based entity with Wright being the primary beneficial owner. In the statement, both parties claimed that Wright’s computer was hacked in 2020, and the perpetrators somehow stole his private keys to two addresses, which held over $4 billion in bitcoin.

Consequently, the law firm requested that the developers “enable TTL to regain access to and control of its bitcoins on the grounds that they owe Bitcoin owners both tortious and fiduciary duties under English law.”

Although their claims seemed a bit controversial, to say the least, the firm has been allowed to go forward and serve the developers, according to a statement made by ONTIER on May 12th.


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It reads that the firm has “commenced the process of serving legal proceedings on 16 Bitcoin developers.” The company was granted permission to serve them out of the jurisdiction by the Business and Property Courts of the High Court in London after 145-page application submission.

The statement highlighted once again that “Dr. Wright is the inventor of Bitcoin” and described TTL as the real victim in this case.

“Tulip Trading is, purely and simply, a victim of theft. The hacking was first reported to the police in February last year. TTL has not been granted permission to seek recovery of its access to and control of its digital assets from those in a position to remedy its loss. The fact that someone has stolen TTL’s digitally-held, encrypted private Bitcoin keys does not prevent developers from deploying code to enable the rightful owner to regain control of its bitcoin.”

To Help the Masses

As with the first statement in February, ONTIER and Wright asserted that if this case succeeds, it could help numerous others victims that have been hacked in the past.

“In what may prove to be a huge relief to many, a ruling in Tulip Trading’s favor would have considerable implications for those who have lost access to their Bitcoin or had coins stolen.”

This is far from being Wright’s first controversial legal endeavor related to the cryptocurrency industry. After claiming, without conclusive evidence, though, that he is indeed Satoshi Nakamoto, his lawyers recently warned two bitcoin-related websites to remove the asset’s whitepaper as he supposedly owns legal rights to the document and the Bitcoin name.

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Source: https://cryptopotato.com/craig-wright-allowed-to-serve-16-bitcoin-developers-over-4b-of-stolen-btc/

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