With each passing day, Decentralized Finance (DeFi) is expanding its practice and maturing to attract significant capital investment.
Almost everyone investing or interested in the blockchain industry would have heard about DeFi till now. We claim to say this because, with $4+ billion assets locked up in the DeFi projects alone, the blockchain industry is on a rampage to grow and expand.
Most entrepreneurs and investors are finding refuge in this advanced financial system (that’s not tied with any corporation or government). Believe it or not, decentralized finance is continuously growing by approximately half a billion dollars every week.
The present DeFi movement was powered by Ethereum, that offers a permissionless and open system, easily available to everyone. These systems have set a benchmark for companies to scale products by leveraging modern innovations in the industry.
Benefits of DeFi System
If you’re here reading about how DeFi would be reshaping the financial services! In that case, you must also be adept about the advantages or benefits it introduces us to over the traditional financial system. However, if you aren’t aware of them, below is a quick list of the advantages of DeFi:
- High Liquidity
- Provides full control over funds
- No involvement of Central Entity
- Restricts fraudulent activities, and much more
What markets are the DeFi Industry disrupting?
Data Management in Financial Industry
There exist massive data sets in the financial market, which demands management. Mostly the data within financial markets is controlled by only a few significant stakeholders. These are mostly responsible for keeping a control over its pricing, access and kind of data being provided.
Several companies like DIA, which is a Swiss non-profit organization aims at becoming an open-source platform for traditional finance and crypto. They have built a system that utilizes crypto-economic incentives to drive supply, share, and usage of digital assets. With DeFi at its core, DIA is all set to offer financial institutions with an immutable and verified single source of financial market data. In this way, they aim at alleviating the challenges present in the global financial market.
With advanced innovations such as compounding interest rates and no-collateral loans, DeFi lending has enabled transparent and secure to source funds, incentivized with multiple crypto rewards.
You must note, these advanced innovations present users with much higher compounding interest rates than traditional banks and peer to peer lending. DeFi lending has emerged to establish a massive growth and many companies have been making the most from the industry’s composability, allowing advanced applications to integrate and create on a broad network.
DEX a.k.a Decentralized Exchanges have been the talk in the market. It’s considered as one of the most important innovations in the blockchain industry by experts. DeFi users are always in control of their funds, which they would be storing in external wallets such as Payscript.
Using wallets such as Payscript can alleviate the risk that comes with depositing crypto into exchanges. Highly secure crypto and digital token wallets help in saving you from losing all the funds in case of mishap or hack.
Decentralized exchanges have a record of processing more than $537 million of transactions in 30 days. With more and more traditional assets becoming digital assets, it would be safe to assume that the exchanges and trades of decentralized finances would be accepted by the users easily.
As discussed above in the asset management section, DeFi payments do not offer any default safeguards or custodians to protect its users against any loss. However, there exist DeFi insurance products in the market, which are saving the users from bearing any such loss. You can use these insurances to pools, personal wallets and smart contracts to successfully mitigate the risk.
If you wanna know more about these insurance providers, there are majorly ten of them who are thriving in creating an ecosystem that’s based on accessibility and transparency. The mission of these insurance providers is to replace the monopolies set by expensive traditional insurance agencies over certain sectors. They’re on the path to make insurance (specific to crypto and DeFi world) flexible and more affordable for users of every category.
DeFi and Asset Management
When discussing finances, managing it becomes one hot topic to discuss. While asset management is essential, it’s one of the most challenging tasks to handle. To tackle these asset management challenges, DeFi offers distinct advantages.
Here’s a list of benefits in managing your Assets with DeFi:
- Non-custodial Ownership of Assets
- Global Access
- Financial Inclusion
- Compossibility to Seamlessly plug in DeFi products with other products
Although there also exists one downside to DeFi based asset management; you’re yourself responsible for the loss of funds. So, if you forget your private key or send the funds to the wrong address, there are no safeguards around it to protect the funds.
However, it’s also important to note here, along with modern and advanced crypto wallets such as Payscript, upcoming DeFi products are also evolving at a rapid pace. Each of these products will educate their users and make it user-friendly for them to manage their assets in the best way possible.
While the above mentioned verticals are where DeFi would be disrupting, it’s not limited to these sectors only. Full potential of DeFi is yet to be found. Currently the Fintech industry experts are all set to use DeFi to deal with their inefficiencies in the present (traditional) services and systems.
Future of the financial sector with adaptation of DeFi technology and modern wallets will include two major characteristics; elimination of limitations and permission less fintech industry.
DeFi with its advanced core and decentralized technology will offer a future financial system that’s permissionless, fast, secured, and highly scalable that the past of present one.
Lastly, DeFi is robust enough to eliminate the current day limitations of traditional financial systems and deliver a better platform for users to choose riskless banking, borrowing, lending, and much more.
While DeFi is set to mark its presence in our future, advanced digital crypto wallets such as Payscript are already making our life easier.
Payscript strives to synthesize blockchain and cryptocurrencies’ dynamism to offer the users a groundbreaking crypto-wallet experience. Whether you’re a merchant or an individual who aims to manage the cryptocurrencies, you can leverage the platform to send or accept crypto payments.