WhatisDeFi?

Ethereum’sgoalistobecometheplatformforthenextweb.Web3.0willbedecentralized,andwithunderlyingeconomiesbuiltintoit,anybodyanywherewillhaveaccesstofinance.TheseDeFiprojectsarebeingbuiltandrolledoutonEthereum.DecentralizedFinance(DeFi)couldquiteeasilybecomeEthereum’smainindustry.Imagineaglobal,openalternativetoeveryfinancialserviceyouusetoday:savings,loans,tradingetcetera.OnethatisaccessibletoanyoneintheworldwithasmartphoneandInternetconnection.SmartContractsThat’sDeFiandit’spossiblebecauseofEthereum’ssmartcontractarchitecture,whichisaprogrambuiltontheEthereumblockchainthatcanself-executewhencertainconditionsaremet.

SmartContractcapabilityiswhathasdrivenEthereum

Theyenabledeveloperstobuildfarmoresophisticatedprogramsthansimply

sendingandreceivingcryptocurrency.Infactthepossibilitiesaresoendless,nobodyknowstheexactvisionpossiblewithdecentralizedsmartcontracts.Asmartcontract,ordApp,isbuiltusingdecentralizedtechnology,whichmeansit’srunandgeneratedbythousandsofdifferentcomputersonallcornersoftheglobe.ThecodeofeachdApp,andEthereum,isopensourceforanyonetoaudit,andalltransactionactivityisalsoopenforanyonetoview.Thisaloneisbuildingaleveloftrustthatisimpossiblewiththelegacyfinanciers.Whiletheopennessmayworrysomepeople,whovaluetheirprivacy,transactionsarepseudonymousbydefault,andnobodyknowsexactlywhoanaccountbelongsto.Unlikethelegacyfinancialworld,nobodyneedspermissiontoparticipate,andnobodyneedspaermissiontobuildanythingontheblockchain.WhileDeFiisinitsveryearlydays,andwe’renowherenearthepossibilitiesofthenewindustry,thefacilitiesarealreadybeingreleased.

Blockfipayupto8.6%interest

CollateralizedloansareabigpartoftheearlyDeFispace.Companiesandevenpeer-to-peerloansarepossible.Whetheryougetaloanfromacompanyorarandomperson,

aslongasyouhavethecollateral,youwillgettheloan.Therearecompaniespayinginterestonyourcryptocurrencies,justforholdingcryptoontheirplatform.Veryfavourableinterestaswell,Imightadd.Theinterestvariesbutit’snotuncommontoreceivea10%returnonyourinvestment.HowcantheyaffordtopaysuchalargeamountofinterestIhearyouask?Theylendoutthecryptotoverifiedinvestorsandmakemoneythemselves.They’realsomuchsmallerthantheirlegacyfinancialinstitutionswithlessoverheads,andbecauseit’sallcodedintotheblockchain,theyhaveamuchcheaperandsecuresystem.DeFiisoneofthefastestgrowingsectorsincrypto–dataactuallymeasuredbyhowmuchETHislockedinDeFismartcontracts,whichisnowover$600m.Notbadforabrandnewindustry.WhatNextforDeFi?Inthecomingyears,everyfinancialservicethatweuseintoday’sfiatsystemcouldberebuiltforthecryptoecosystem.We’vealreadyseenindustrysectorssuchasexchanges,borrowing,lending,custody,andderivativesbuiltforcrypto.Thisisjustthebeginning.DeFidAppsrelyheavilyoncollateralasasafeguard,today,butthatwillevolveasregulationsareimplemented,andthiswillintroduceunsecuredborrowingandlendingintotheDeFispace.Thiswillneedasecureidentitysystem,somethingonlyablockchaincanoffer,andwithit,userswillbuilduparatingliketoday,andbegivenaccesstofundsnotjustfromtheirlocalbank,butprettymuchanywhereintheworld.

Theusuryindustryissetfordramaticchange

DeFiwillevolveasDAOsevolve,too.Aragonisbuildingsomethingthatcouldresembleadecentralizedgovernment,andmuchmore.Anythingcanbecodedintosmartcontracts,andwithunderlyingfinancelockedintotheprogram,thefutureofDeFianddAppsingeneralisimpossibletoquantify.Itisareallyexcitingtimetobealive.Innovationisgrowingsomuchquicker,andEthereumisgoingtodisruptandevengivebirthtomanynewindustries.It’searlydaysnotjustinDeFiorevenEthereum,butthewholeblockchainmovement.Legacyindustriesaretakingnote,andmanyarejoiningforcesandbuildingonEthereum.Idon’tknowexactlywhatthefuturewilllooklike,butI’mconfidentDeFiandEthereumwillplayalargepartofit.www.ethereum.orgwww.ethereumnexus.org