This article was first published on Stories by ælf on Medium
After a sluggish year in 2019, the blockchain industry has been revived this year by DeFi, a highly innovative financial model. 2020 will no doubt go down as a very special year, as the coronavirus has plunged the global economy into recession and put millions of people out of work. Amid this difficult time, the blockchain industry has somehow bucked the trend. Not only was it unscathed by the Covid-19 pandemic, it has even made a couple of major breakthroughs.
Decentralized finance, or DeFi, which has been around since 2018, is a fascinating field and has been particularly popular with investors, exchanges and projects this year. The reason is obvious. Unlike the traditional centralized financial model, DeFi is entirely decentralized and highly automated, requires no third-party custody, and its transaction records are transparent and traceable on the blockchain. Many people saw in it an opportunity to revolutionize finance. Blockchain companies are putting big money into the field. Moreover, the traditional financial industry and governments have also made many attempts and conducted a lot of research.
After two years of steady growth, DeFi suddenly took off in the first half of this year as a large number of decentralized lending, asset management and derivatives services and protocols began to be known to the public. Much like the dApp craze three years ago, Ethereum is once again being sought after by everyone. These smart contract-based projects, including Compound, Maker, Aave, Yearn, etc, have grabbed the headlines and attracted large investment. And far from slowing its pace down, DeFi began to move forward even faster.
The first major breakthrough is the invention of the so-called “liquidity mining”. In order to incentivize people to put money onto their platforms, DeFi projects would issue their own tokens, which are distributed in proportion to the staked funds ...
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Stories by ælf on Medium