Decentralized finance is the hottest topic in crypto, best known as a way to make a fortune by backing the right tokens, but also as a tool to take crypto you were hiding in a cold wallet and let it earn extraordinarily interest. To set to work. rates.
One reason why DeFi has grown so fast is that it has slowed the Ethereum blockchain where most projects remain to a crawl, and gas prices for transactions go up to $10, $50, even $100. increases.
DeFi is mostly talked about handling the banking and brokerage functions on which big finance thrives, but the technology could be used to revolutionize many other businesses, from energy to e-commerce.
The reason for this is simple: at its core, decentralized finance is about eliminating the middleman.
Why lend your money to a bank – for a meager fraction of 1% interest – to loan it out, when you can loan it through a crypto lending site for orders of magnitude more?
Or invest it in a liquidity pool that uses an automated market maker to create a shared pot of tokens that cryptocurrency traders can sell or buy, rather than waiting to find a trader who can sell them at whatever price they want. Want to sell want to buy it. The way liquidity pools work is that liquidity providers lock funds into the pool in exchange for fees paid on each transaction – usually paid in the exchange’s native tokens.
All you’re doing is, in effect, replacing the institutions that facilitate those transactions—the guy who’s in the middle of taking it from Jane and giving it to John—with smart contracts that introduce currency. And the exchange automates both. In other words, it converts peer-to-business-to-peer transactions into peer-to-peer transactions.
The difference is the immutable nature of the blockchain, which makes it impossible for both parties to cheat. Because it is not trustworthy, you do not need to pay a trusted intermediary to do so.
Financial transactions are the low-hanging fruit for DeFi, as they are so frequent and the value of the currency being traded is so large. That said, DeFi can be quite complex in its trading, staking and yield farming formats. But, this is mostly because people are willing to do risky things like betting on margin with borrowed money.
However, DeFi works for any data you need to transfer from one party to another. It could be e-commerce, insurance, digital identity and even electric power – the possibilities are endless. And in most cases, they are quite simple.
Decentralized energy is raising enough interest that it has been given its nickname – DEN instead of DeFi – even though it also uses dApps and smart contracts, and generally resides on the Ethereum blockchain. Other than removing the middlemen – brokers and utilities – the only real difference is kilowatts instead of kilobytes.
A year ago, German sustainable energy firm Lions launched its blockchain-based, decentralized peer-to-peer energy exchange, which lets individual consumers choose which to buy their energy from cheap or green or local electricity producers. The source is – whatever they choose.
it’s running, and accordingly For a power industry publication, consumers are saving an average of 20% on utilities, while power producers are seeing a 30% increase in revenue.
decentralization of e-commerce
E-commerce is another area for disruption by DeFi, and one of the companies to do so uquido, which aims to build a bridge between DeFi and e-commerce.
One way to do this is through defito Finance arm, which focuses on buyer loyalty programs using tokens earned with every sale or purchase.
The site pulls together three technologies commonly used in DeFi trading, lending and mining operations and adapts them to the needs of an e-commerce site.
Shopping Mining is a loyalty program that creates and rewards newly minted tokens with every purchase from Uquid’s many online stores, which offer everything from video games and music to subscriptions to streaming services like Spotify and Xbox Live. is. It uses one of DeFito’s native tokens, the DeFi Shopping Stake (DSS). Once mined, these tokens are loaded into a smart contract that allows them to be used for future purchases from Uquid sites or to place bets in liquidity pools.
DeFito’s other token is DTO, a governance token that can be earned by contributing liquidity to the purchase liquidity pool. Rather than making it possible for cryptocurrency merchants to buy and sell tokens, DeFito pools represent digital goods on Uquid’s ecommerce sites, from games and business software to gift cards and mobile top-up cards. An automated shopping producer connects pools of goods from different suppliers, allowing token holders to find and track the best prices for the quantity of goods they wish to purchase. These sites accept cryptocurrencies for payment.
Both DTO and DSS can be used for staking and payments, but the DTO regime brings voting rights, including whether DSS tokens should be burned to increase their value or to develop a reward system. must be used.
Another DeFi token is Uquid (UQC), a decentralized ERC-20 token that can be used for a variety of traditional DeFi services, including staking, lending, lending and token swaps, as well as goods including utility, grocery and pharmacy vouchers from chains around the world Huh.
Lastly, Uquid recently added a fourth token to its new NFT marketplace, NFTD. Fungible tokens are at the heart of a digital product marketplace where they can be used to provide clear ownership rights to buyers of digital goods. It is a Binance Smart Chain utility token aimed at everything from social media content to TikTok and YouTube videos to photographs and music, as well as other digital content from Uquid.
Disclaimer. Cointelegraph does not endorse any of the content or products on this page. While our aim is to provide you with all the important information we can obtain, readers should do their own research and take full responsibility for their decisions before taking any action relating to the company, nor should this article be invested in can be considered as advice.