New business models have emerged from the concept of decentralized finance since the advent of Bitcoin and cryptocurrencies. The idea of the decentralization of the monetary economy has been prowling the world in an increasingly expansive way. Especially within the environment of Bitcoin and Ethereum, the most popular cryptocurrencies at the moment. But why will it be the future of the economy?
It’s well known that decentralized finance is rising as a tool for businesses in markets that are still developing. The industry of banking is starting to suffer the consequences of the inflexibility of their current processes. Since last summer DeFi has had a revival. Crypto such as Ether and Bitcoin are becoming more and more accepted as payment methods. USDC has progressed towards becoming an asset that will maintain the value without depreciating. Also, the technology of blockchain is on its way to have the financial infrastructure to offer a system similar to the infrastructure of tradicional finance.
New business opportunities have opened up within the world of cryptocurrencies. Such as open lending protocols, issuance and investment platforms, prediction markets, open exchanges and markets, as well as more stable currencies. On the other hand, the issuance platforms are oriented towards the creation of new tokens. Currently this market has focused more on the issuance of security tokens, so issuance platforms seek to provide issuers with the conditions so that they can launch tokenized securities within the blockchain.
Decentralized finance comprises all financial services offered by automated applications hosted on blockchains that include services such as loans, the trading of currencies that earn interest that no bank offers, and implement investment strategies.
The advantages of decentralized finance are that the source is open and anyone can participate, without a central body that places restrictions or can manipulate it. Their flexibility and possibilities are innumerable. It is still early to tell the real potential of it when implementing it in day to day life. Although the growth within the cryptocurrency sector has been gigantic, cryptocurrencies have not yet reached mass adoption. There is an opportunity for growth. It’s also important to understand that the risks are many and varied. One should always keep in mind not to invest or dedicate money that you are not willing to lose.
It seems that the last hearing at the Congress brought some light on the Democrats and Republicans Vote on Crypto legislation. During the hearing, major crypto companies stepped into the scrutiny of Congress for the first time. They argued that the booming industry requires federal supervision without the rigid policies that regulators advocate for.
One key discussion point was deciding if digital currencies are assets that the Securities and Exchange Commission should police. Alesia Haas, Chief Financial Officer of Coinbase Global Inc., testified that she strongly disagrees with that approach. Haas argues that rules that are decades old, designed specifically for different kinds of assets, like stocks, are not appropriate for digital currencies.
The hearing lasted for almost five hours, and companies expect it to help legitimize the crypto industry. On the other hand, it revealed the difficulties that the federal government faces in trying to regulate the industry.
The leaders of significant crypto projects, such as Circle Internet Financial Inc., and Coinbase, were questioned. Interviewers wanted to know how their businesses should be overseen, to which the executives answered clearly.
The lawmakers raised clear divisions that demonstrated that the prospects for approving the legislation are not clear. However, the hearing allowed crypto companies to assert that this could be a milestone for the industry.
Millions of Americans have dived into investing in cryptocurrency assets; the market value is nearly $2.4 trillion. The regulators and lawmakers are struggling with how to monitor the securities.
The executives’ testimonies provided some light on the learning curve that the government officials at the capital will have. Some members of the democratic party expressed their concerns about fraud and other abuses of such nature. Meanwhile, republicans focused on the fact that too much regulation will slow down the natural innovation process.
Maxine Waters cautioned that the industry is vulnerable to manipulation, fraud, or abuse without federal supervision. People in the US keep making financial investments in digital assets by the hour. Without the proper regulation, officials expect for fraud to increase too.
On the other hand, Patrick McHenry, from the republican party, argues that the Democrats first need to understand tokens. He also stated that Congress should embrace digital assets, like cryptocurrencies, to make sure investment grows in the US.
Some Democrats in the panel stated their concerns as executives mentioned that tokens could help people without access to banks. Jeremy Allaire from Circle pointed out that it’s an open financial system. The system allows anyone with a mobile device to exchange value with another person anywhere in the world.
The committee of democrats kept questioning the protection provided for investors on tokens. Moreover, they allege that they notice extreme volatility in this market and question the possibility of a bubble.
There have been a lot of people working in the creation of something new that could potentially bring technology to the masses. We’ve been witnesses to the evolution of the crypto industry. We have seen the advantages as well as the areas of opportunity for it. Unfortunately, it seems clear that it will take a few more attempts to get some of this progress done before the Democrats and Republicans vote on crypto can favor the industry.
It’s been over two years since Facebook’s crypto was announced; this was made public back in 2019. Usually, the goal of new cryptocurrencies is to get into the stablecoin market, so why is Libra not here yet?
Two years ago, Nassim Eddequiouaq and Riyaz Faizullabhoy left the company Anchorage to start working on Facebook’s crypto wallet. Facebook’s crypto, also known as Libra, was announced for the first time back in June 2019. In the crypto space, that counts as ages. First, it was pitched as a global currency without borders. The plan for the token was to be backed by the Libra Reserve, which is a compilation of assets with low volatility. Such assets were supposed to be Government securities and bank deposits, to name a couple.
Only in the first few months, the Libra Association lost many of its founding members. During that first wave, important companies such as MasterCard, Stripe, Paypal, and eBay were among the deserters. Then, in an attempt to get a new fresh start, Facebook’s crypto changed its name to Diem, and the wallet app created to hold it was renamed Novi. However, the name wasn’t the only thing that changed; its goals and ambitions were also downgraded. The new concept set the coin as a simple stablecoin pegged to the US dollar. That is far from being the borderless currency promised at the beginning. The market is full of stablecoins accessible at more serious companies such as Paxos, Binance, and Circle.
Now, two years after it was first announced, it’s worth asking: is there anyone who wants to acquire crypto from Facebook? Facebook’s principal founder, Mark Zuckerberg has been involved in legal issues regarding users’ privacy and data protection on his social network in the past couple of years.
Zuckerberg has been called to court several times to lend testimony about the allegations against him and the platform for which he’s responsible. The irony here is that Facebook’s crypto is not only his thing; it’s a whole project backed up by a group of companies based in Switzerland. Part of the plan is to decentralize the coin progressively. The biggest problem they’re trying to solve right now is that the project was first made public by Facebook. Also, Zuckerberg, who is an executive of Facebook, has become the face of it. Therefore fortunately or unfortunately, if the project will succeed, it will be determined by Facebook’s future reputation status. .
Although it seems like Zuckerberg has already moved onto his next project, Metaverse, there’s hope for Facebook’s crypto. The most significant advantage that the project owns is the 2.9 billion users the network has. Whatever stablecoin the company decides to embrace, a substantial number of users will give it a try. There’s still hope for the cryptocurrency, but if it’ll be a long-term sustainable project, it remains to be seen.
Although the ban in China is not entirely new to crypto users, it had a few updates that made it bullish for DeFi. The newly implemented rules make it all suitable for decentralized projects. Therefore it creates a tendency that we could call bullish for DeFi in general. Just a few weeks ago, China banned BTC altogether, or at least that’s the approach that many news outlets reported. In simple terms, the Chinese government declared all transactions involving crypto illegal. It’s understandable that it’s not easy for the general public to grasp the whole concept of what China has done. Every time the country announces new guidelines, it wreaks havoc in the crypto space, thus wildly shaking the price of Bitcoin, among others.
The other bans that China has implemented this year have brought consequences for various industries. Not only has the Chinese crypto industry suffered. Besides the miners who had to leave the country this year, retail traders and investors got blocked in China. Some DeFi projects such as Debank and Loopring have stopped IP addresses in China from accessing them. Also, crypto groups on WeChat in the country are now moving to Discord or Telegram.
In theory, this last ban imposed by the Red Dragon is not so different from the previous ones announced. The main difference is that they’re making it very clear that it will be enforced more rigidly this time. This approach is due to the amount of government departments involved in the matter, it will all become more strict. The crypto community in China, including protocols of Decentralized Finance, is trying to approach the subject safely. They have already started blocking Chinese users due to the risk of getting investigated. There has been a minimal impact in the crypto community in a broader range since the ban back in May had already shaken the market.
At the moment, crypto builders that are still in China have to remain entirely in anonymity. It is a challenging task to accomplish, full of risks and unfortunately not entirely possible every time. They must adjust the structure of their organization, the marketing strategy, and the way the expectations of their projects are met.
In confidence, some DeFi founders said they are gradually closing business in China since most of their users are international. Now, it’s become clear that the old golden days when the empires were built by feeding the massive demand of crypto in China are over. The last ban is definitely a catalyst to the decentralization of crypto. It can be considered bullish for DeFi and also for the mindset that many in the crypto community are used to having. It will be interesting to witness how all of this will unfold, afterall, there are no boring days in crypto space.
The central part of Europe, the West and the North, also known as the European block have reached the highest volume of digital trading currencies. That makes it the block with the most activity in crypto. A company specialized in blockchain analytics shared the news a few days ago through one of its reports. The report stated that the block received over $1 trillion in crypto only last year. That amount means that the region by itself represents 25% of the total activity in the crypto market.
According to the report mentioned before, said block accomplished this due to a variety of factors. East Asia, the biggest longtime competitor , would always take the crown.Nonetheless, the main reason for the European block’s climb to the first place is the implementation of several new crypto regulations, especially those in China. Since July 2020, the activity in the crypto market has plummeted in the East Asian sector. Therefore, the region went down to third place on the list of most significant economies in the crypto space. North America, which holds second place, has a slower but more steady pace of growth.
The same analysis also revealed that the volume of transactions in the European block went up in a dramatic way. The block went up not only on digital assets but in services related to the industry as well. This finished the consolidation of the region in the world economy of cryptocurrencies. Additionally, them adopting crypto and starting implementing them into their day-to-day life makes a big statement. It means crypto is here to stay. Statistics show that Europe sent 25% of its crypto to other blocks around the world. As much as 34% of North America’s last year’s crypto acquisition came from Europe alone.
There was a flow of institutions willing to invest, which provoked the excess of transactions. According to Chainalysis, $10 million was the total amount worth of said transactions. The crypto transactions made by institutions went from $1.4 billion to $46.3 billion in 12 months. Furthermore, institutional investors activity was responsible for over 50% of the crypto activity alone in the European block.
Most of those funds went to protocols in decentralized finance. Wrapped Ethereum and Ethereum are clear evidence of the info stated in the report. Bitcoin, stablecoins and altcoins went down 20%.
During those 12 months, DeFi protocols represent some of the five top services. Some protocols like Instadapp, UniSwapp, and dYdX are constantly on the Chainalysis list of the top services that got crypto-related transactions from the European block. The most searched centralized exchanges are Binance and Coinbase.
In the last few days, since China banned all transactions in crypto, there has been an increase in DeFi. Many protocols have been surpassing their average volume of trading; some even exceed centralized exchanges. For example, the price of DYDX, a decentralized exchange token, has increased by 35.9%. It got its highest price ever, $22.17, according to reports. Coinbase, the largest centralized exchange in the US, was also surpassed by the volumes of trading of the protocol.
Different from centralized exchanges, smart contracts are what DEXes mainly rely on. These are parts of code that execute automatically under pre-established circumstances . By doing this, DEXes enables users to trade crypto without a middle man.
Last Sunday, the founder of dYdX, who was also an employee at Coinbase, made a statement on Twitter. In his post, he said that he was humbled and blown away by the growth that recently took place. He also pointed out that this is the first time that Coinbase was outperformed by dYdX.
After Juliano posted the tweet, there was an increase in DeFi, the volumes of trading at dYdX got even higher. It overpassed the $3 billion mark on spot markets and $6.3 billion in derivatives. At Coinbase, the trading volumes were at $3 billion in the last 24 hours. Present times look promising for other primary DEX tokens. Such is the case of SushiSwap (SUSHI) and Uniswap (UNI), which have recorded rising gains of 29% and 36%, respectively.
The increase in DeFi, particularly in the price of DEX tokens can be explained by the news China gave just a few days ago. The government of said country implemented new restrictions that had a significant impact on the crypto industry. Last Sunday, there was evidence on Twitter that Chinese traders are looking for new ways to make money. The most logical option for most of them is the DeFi space. There are also predictions that a significant amount of Chinese users will move into the decentralized finance world. Therefore, dYdX and MetaMask are expected to increase their number of users exponentially.
It was only last Friday when the PBoC (People’s Bank of China) released a list of newly forbidden activities related to crypto. Issuing tokens and trading were among said activities, therefore the increase in DeFi. They also banned exchanges outside of China to provide services to the local investors. Because of this, a couple of leading crypto exchanges (when it comes to the volume of transactions) already stopped registrations for new customers in China. These companies are already implementing their plans of cleaning up the accounts that already exist. The plan is to get all this done by the end of 2021.
Avalanche (AVAX) is the quickest platform for smart contracts in the industry of blockchain. It also has the most significant number of validators to secure any PoS protocol. Some of the main features of Avalanche are speed, meager costs, and it is also green. The platform enables any app of smart contracts to overtop its opponents. On September 21, 2020, it launched its own network with its own protocol and technology. The platform’s growth can be noticed in the more than 200 individual projects it has secured over 1000 individual validators that produce blocks. The community has 600,000 members all over the world. Whoever feels skeptical about Avalanche’s success just needs to give the app a try to understand what all the fuss is about.
Naturally, such a platform would have a token to monetize with; AVAX is the given name to Avalanche’s native token. AVAX is a scarce good that is hard-capped, commonly used to pay for fees. Mainly, it’s used to secure the platform and supply a basic unit for accounting among the variety of subnets on Avalanche. All of that while connecting the platform through the stake method.
It is possible to find Avalanche AVAX across the leading exchanges and expanded trading pairs.
Only four months after the mainnet launch of the platform and it’s already expanding faster than expected. The platform has been growing by leaps and bounds, private securities, Synthetics, DeFi, Stablecoins, Prediction Markets, etc. You name it, they have it, or they’re already working on it to make it happen. All of this is possible due to its high processing capacity, low fees of gas, which offers decentralization like no other. That by making it possible to scale the number of validators to millions with its protocol.
It is a platform of platforms consisting of thousands of subnets that create an interoperable network of numerous blockchains. Avalanche takes advantage of the revolutionary protocols to provide security, among other things, that offers decentralization while complying with regulatory requirements. Avalanche enables you to create your own app, tailor-made with specific blockchains that support several virtual machines and multiple languages. Those virtual machines can later be deployed in a particular blockchain network that is called a subnet. A subnet is a set of validators that work together to obtain an agreement on the state of a group of several blockchains.
A couple of days ago, the token of Solana’s protocol, also known as Sol, went through sharp fluctuations in price. Solana’s high volatility was due to a flood in the network that took place this week. The token fell more than 15%; later on, it regained a lot of the losses. The asset fell as low as $142.86 a few days ago, at which point, the crypto had already lost about 16% after getting the intraday high amount of $171.48. All of this is according to data from Messari.
At the beginning of September, it reached a new high of $214.36. By the time of the last crash, it had already fallen a bit more than 33%. The token started recovering soon after, and at the moment of this writing, it was trading at $159.11.
The network experienced technical difficulties, and it went down soon after; this was announced on September 14. That’s when most of that day’s action in price took place. Around 8 am that morning, the network had produced the last block, then a bit after 11 am, the CEO posted a tweet addressing the difficulties. The message stated that bots were flooding the network through a DEX that was happening on Raydium. The last being an automated provider of liquidity and market maker built on Solana. Then finally, at 3 pm, the Solana Twitter account gave an update. The post declared that the network experienced increased transactions, which saturated the processing channel and caused the web to start forking.
Even though it’s true that the price of SOL went down during this incident, it had been experiencing a downward trend before. More than one analyst concludes that today’s price action is a combination of standard profit-taking and technical difficulties’ impact. They say that after SOL’s price got to its overbought level, it was customary for it to go down because of profit-taking.
Despite the unfortunate situation, analysts generally provided an optimistic view on the future prospects of Solana’s project. Of course, what happened will still impact the token price, but they’re also confident about its comeback. They don’t believe it will affect the cryptocurrency long-term and set Ethereum’s early years as an example. Although, they also made it very clear that the project needs to get the network running fast. They believe that because of Solana’s high volatility, they may have a perception issue in the near future if they don’t fix this soon.
In this case, it has become evident that it is not the bug itself that caused Solana’s high volatility in the first place. Instead, people are more surprised that the reaction of the crypto community has come together to find a solution for it. Now the question is not if the Solana network will be able to fix it, but when. And when they do, it’s going to be soon enough for it not to suffer a lot of loss on the matter.
The net value of DeFi went above $170 billion as other projects outside of Ethereum are becoming increasingly more vital. Despite the recent $600 million hacks that cost Poly Network considerable money and an even more significant amount of users. The total value of decentralized finance got to an incredible USD 179.9 billion last week and is fast approaching the $200 billion mark. This is due to the significant momentum of growth that other DeFi projects, besides Ethereum, have been gaining during these last months. Currently, it’s Uniswap, the one dominating the second place with 3%.
According to the statistics, only during the last hours, the Total Value Locked (TVL) increased by 1%. It’s expected that it will keep growing at the same rate in the following days. After the already mentioned Uniswap, the decentralized finance app, Aave, is in charge of $16.04 billion, and Curve of $13.92 billion. This, considering that most of the TVL are actually locked into the reinforced app of Ethereum.
But nowadays, it’s not all about Ethereum. On the other hand, we have several other smaller networks contributing to the TVL. That is the case of Binance Smart Chain (BSC) that has a bit over $19.05 billion of the TVL. Terra follows BSC with 7.4 billion USD, then Polygon with 5.3 billion USD, Solana with a TVL of 2.36 billion. Not far below is Klaytn with a little over 1.29 billion USD total.
Now, we talk about the platforms for the exchange of DeFi; then we can conclude that Curve counts as the highest TVL. Currently, Curve has a TVL of 13.92 billion USD, and after it comes Pancakeswap 5.94 billion, driven by the BSC. And Uniswap, with a TVL of 5.3 billion USD. To set a better picture of the growth of decentralized finance, only for the chain of Ethereum, among 16 other different platforms of dex, statistics reflect that so far there was a total of 19 billion USD global worth of exchanges, only during the last week. Of course, Uniswap had the most considerable dex volume of them all, across all 16 platforms of dex, with 69.2%.
As you can see, Uniswap is the main dex of Ethereum. The statistics mentioned above prove that the decentralized exchange got about $12,952,621,793 in total trading transactions around the globe. A significant percentage of it comes straight from dex apps, but the rest is channeled through other aggregators of dex. Such is the case of 0x API, 1inch, Paraswap and Matcha.
Another worth mentioning relevant statistic in the sector is the total of DeFi users or unique addresses in defi apps based on Ethereum. The last already went above the 3.3 million users. Today’s biggest loan apps include platforms like Compound, Aave, Anchor, Cream Finance and Venus respectively.
The token of Cardano, ADA, has exceeded other coins on top positions and just became the third-largest cryptocurrency worldwide. Now, developers of different networks aim to capitalize on the rise of DeFi that is taking the world by storm. At the moment, the currency is being traded on various exchange platforms. ADA challenged a big crash in price by a warning to jump into a historic high, going even above its previous record.
On Friday, August 20, the token’s rate went over $2.56, registering an increase of 154.54%. The culmination of a movement that had already begun on July 20. All of that despite expert’s opinions who warned about a fall in price. Now that the price of ADA skyrocketed by 50% only during last week, the trust in the advancements in new technologies has also grown.
The previous also boosts confidence that Cardano will enable payment systems on its platform earlier than expected. This improvement is known as the “Alonzo” upgrade, and its release has been officially scheduled for September 12. The investors of ADA keep driving the value of Cardano even higher in anticipation of said upgrade. The upgrade will present smart-contract functionality to the blockchain, which will allow Cardano to settle as a significant player in the DeFi universe.
Due to the low price, Cardano ADA has become one of the most sought-after currencies by traders. Now, with Cardano’s ability to work with smart contracts, the currency has been gaining consistently. On the other hand, its main competitor, Ethereum, dominates the $100,000 decentralized finance space.
These are also known as blockchain contracts and distinguish themselves for the methodology in which they ensure conformity between the parties involved in a transaction. These contracts are comparable to the standard traditional contracts. They function between two parties or more that don’t require the involvement of a third party to ensure the enforceability of the agreement.
Without traditional middlemen like banks, people who use DeFi can transfer financial functions straight onto digital ledgers. That allows them to lend cash or borrow it and collect interest in an account of savings.
The rises in crypto like Bitcoin, Ether, ADA, and others contributed to the market surpassing $2 trillion in total value last weekend. The first time it happened since the crash was in mid-May. And now, on September 12, all eyes will be on the Cardano ADA “Alonzo” upgrade. We’ll have to wait and see how this affects the whole crypto market. If it goes well, ADA could be considered a severe competitor for Ethereum, probably starting a new age in crypto history.
At the end of July, Bitcoin jumped over the $30,000 mark after Elon Musk mentioned that Tesla is “most likely” to accept it again as payment. Back in May, the carmaker stated that Tesla would not take the crypto for purchases. That is due to his concerns about the impact that mining Bitcoin could have on the environment. This came out only after two months that the company started receiving the crypto as payment. During the B-Word crypto lecture, Elon Musk stated that the company would likely accept Bitcoin again.
Early this year, a group of investors and environmentalists vigorously attacked Tesla for starting to take Bitcoin as a payment method. They criticized that Tesla was seen as an environmentally responsible company, and taking energy-intensive crypto was a contradiction.
The founder of Tesla has also been in the spotlight to use his privileged position and popularity to back up different crypto. While in a conference earlier this year, he commented that besides Tesla and SpaceX, his rocket company, he owned a variety of cryptos, such as Bitcoin, Ethereum, and Dogecoin. His statement, of course, caused an increase in said cryptocurrencies. He also mentioned that he had already participated in the artificial rise in cryptocurrencies before he planned to sell them but would like to see Bitcoin succeeding.
After those comments, there was an increase in Bitcoin of 6% at $31,952, Ethereum 10.6% higher at $1,979. All this according to the website Coindesk.
The CEO of Tesla and SpaceX has stated on several occasions that he has no plans of selling his crypto anytime soon. If you decide to invest in Bitcoin, experts on the subject suggest sticking with a strategy long-term instead of trading short-term. Some recommend planning to hold for about ten years at least.
When we consider that costs for crypto can be high, we can conclude that buying and holding can be of benefit in that regard. A good approach is to view Bitcoin as something you should hold on to for a more extended period. Even though it might be tempting to trade while following social media, experts recommend fighting this urge.
Before launching yourself into an investment in Bitcoin or any other coin, you should learn about it and understand all the possible risks. It’s important for new investors to understand that the asset is very volatile. One has to be comfortable with fluctuations and also the possibility of losing money. There are no guarantees. The cryptocurrency universe is hardly regulated, so you should ensure that whatever you choose to invest is something you can afford to lose.