This article was first published on Wings Dao - Medium
Introducing Our Blog on DeFi
2017 was the year of ICOs with over $6 billion raised. 2018 proved to be the year of stablecoins as the cryptocurrency market decline prompted the demand for stability. Their total supply has recently reached $5 billion. Powered by the demand for stablecoins, new financial instruments have emerged, such as lending solutions, which opened the door for new opportunities during these turbulent times. As a result, 2019 is likely to become the year of DeFi.
DeFi is shorthand for decentralized finance, i.e. the emerging field of decentralized finance apps running on public blockchains and working without the need for banks or other financial intermediaries but rather utilizing smart contracts in their stead. DeFi is borderless, trustless, transparent, and available to everyone with internet access.
Today, DeFi is first and foremost about p2p lending. In 2019, the entire amount of assets involved in DeFi exceeded $500 million, with most of them used in two kinds of credit operations. The first is the issuance of a stablecoin, which is in fact a crypto asset-backed contract for difference (a certain DAO issues a stablecoin and lends it to a user with their crypto asset as a collateral). The second is about various p2p loans on the secondary market that use crypto assets as a collateral.
However, DeFi is much more than just that. It’s a viable alternative to the traditional finance. You may borrow money from a bank using your car as a collateral, or borrow the same amount in a decentralized app with your cryptocurrencies as a collateral. In the future, you might borrow money from a decentralized app using your car as collateral. DeFi is a new evolutionary phase of the cryptocurrency and financial ecosystems. After all, decentralized money has to be complemented by decentralized credit sooner or ...
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Wings Dao - Medium