Unless you’ve been hiding under a rock over the last year then you will have heard of Decentralized Finance, often abbreviated to DeFi, the next step in the evolution of digital banking that already accounts for more than $6 billion in crypto assets.
Put simply, it is an electronic financial ecosystem that runs on a smart contract blockchain. In contrast to traditional banking institutions, blockchain-based DeFi solutions are fully automated. As a result, they require no human intervention, as the smart contracts allow for instant execution, the second pre-programmed conditions are met. Utilizing blockchain for Decentralized Finance applications ensures that the technology is accessible to everyone with access to the internet.
DeFi represents genuine democratization of finance, but how does this differ from other blockchain-based initiatives over the last few years? The answer is that DeFi applications, or dapps, are able to make new contributions to the global financial sector. They are incredibly versatile, enabling you to perform multiple functions, including borrowing, loaning capital to earn interest, exchanging assets, insurance, storing assets, trading, and more.
Dapps are highly cost-effective, requiring no middlemen or needless bureaucracy. Safeguarded by heavy encryption, they are able to provide financial services at incredible speed. They offer financial autonomy to populations that have historically had no access to banking services since without all the intermediaries Defi applications can afford to reach and service the previously unbanked.
Dapps are most commonly used for lending and borrowing digital currencies. The process is exceptionally straightforward, as you can interface directly with the smart contract from your crypto wallet. Using open-source code, DeFi solutions are completely transparent, with transactions published on the blockchain, enabling you to verify the reserves of DeFi banks and find the best loan rates.
The tradability of DeFi is another beneficial characteristic. Through tokenization, DeFi applications can enable you to invest even if you don’t have hundreds of thousands of dollars in spare capital, as you can simply purchase tradable tokens that represent a portion of a larger high-value investment.
The use of blockchain for Decentralized Finance also means that there is no single, centralized entity, such as a governmental body, corporation, bank, or other financial institution controlling transactions between parties or the movement of assets.
How can DeFi help me earn sizable passive profits?
One of the most exciting developments in DeFi is the way in which decentralized applications can be harnessed by yield farmers to generate unparalleled returns. Dapps offer speed and flexibility that enable you to make profits far higher than those offered by almost any other investment opportunity.
While traditional means of growing your capital such as real estate or the stock market may provide healthy returns, the annual percentage yield from DeFi solutions can be far greater. So too, for those who already hold cryptocurrencies, dapp products and protocols can offer substantially higher returns than a regular crypto wallet that simply secures your funds, while they sit idle.
As opposed to simply investing in Bitcoin, Ripple, or Ethereum, yield farmers are leveraging the technological advantages of blockchain for Decentralized Finance to become liquidity providers. They allow DeFi applications to borrow their crypto capital at exceptionally high rates of interest and the company will then use those funds to trade or to offer loans to other users. Everybody wins, as the company gains liquidity and the user earns sky-high returns on their crypto.
What are the Drawbacks of DeFi?
We’ve now defined DeFi and examined some of the clear advantages of a digital banking system that is fast, efficient, and flexible. However, the disadvantages of blockchain for Decentralized Finance should not be dismissed out of hand.
Firstly, as with many forms of crypto investment, there is always a danger of losing your crypto forever. Because you have complete control of your digital assets, a lost private key, an address typo or a forgotten password can mean that you lose your money forever.
Secondly, as crypto represents a still emerging asset class, the regulatory status of your investment may remain undecided for the foreseeable future, while government entities try to catch up and classify DeFi applications.
Additionally, many dapps offer high-risk loans with steep collateral requirements and tough conditions attached. For example, if the value of the coin that the crypto holder has offered as collateral drops to below a certain threshold then their funds are liquidated completely and they lose all of their capital.
Finally, smart contracts are open to forms of attack that do not exist in traditional financial ecosystems. In the first half of 2020, there were already at least five major hacks on DeFi applications that led to significant losses.
DeFi Meets CeFi: A Winning Formula
In light of the issues that have yet to be resolved in the DeFi arena, many investors are recognizing that the best way forward is to combine the best aspects of DeFi with the benefits of a more traditional, Centralized Finance (CeFi) approach.
One of the best examples is ArbiSmart that is offering the best of both worlds, with a hybrid system that delivers the accessibility, privacy, cost efficiency and speed of blockchain alongside the added layers of security that come with a CeFi platform’s human oversight, rigorous regulation, and risk management protocols.
ArbiSmart uses AI-based algorithmic software on a fully automated crypto-arbitrage platform that offers exceptionally low-risk, high-return investing. Arbitrage involves buying an asset on one market at a low price and then selling it on another platform at a higher price for a profit. On the crypto exchanges, a coin can temporarily be offered at different prices on various exchanges at the same time.
The ArbiSmart system automatically scans over twenty exchanges simultaneously to find the lowest purchase price for a cryptocurrency. It buys the coin where the price is the lowest and then immediately sells it on the exchange where the price is highest to earn a profit on the spread before the price discrepancy gets resolved. Arbismart provides returns of up to 45% a year, far higher than any legitimate competitor in the DeFi space, where the average return is approximately 12% per annum.
Although ArbiSmart is automated, they offer one of the major advantages of CeFi, by having an expert risk management team overseeing the platform and monitoring the markets around the clock. This enables them to minimize exposure by allowing for human intervention in instances of extreme crypto market upheaval, thereby mitigating a lot of the risk associated with fully automated DeFi applications.
Personal, human supportis also available 24 hours a day both from dedicated account managers as well as via email, phone, Viber, Telegram, Messenger, and Whatsapp. Unlike with completely decentralized financial applications, ArbiSmart can assist in the case of lost access. Users can always reset their passwords, and keys cannot be lost, ensuring they can always regain access to their account balance.
In addition, Arbismart has implemented a series of strict security measures that don’t leave the system as exposed to hacks as DeFi open source systems. ArbiSmart is also fullyEU licensed, ensuring that the company is frequently audited, implements AML and KYC protocols, to safeguard against fraud and undergoes high-level data security checks. Also, if there ever were a hack, as a regulated company ArbiSmart has an internal emergency insurance fund to cover all operational capital and protect users against loss.
Another way in which ArbiSmart is a more secure option than its purely DeFi competitors is that it does not offer high risk, over-collateralized loans in a market characterized by high volatility. Unlike many decentralized apps, ArbiSmart does not expose crypto owners to significant losses from market fluctuations. Not only is it impossible for a price shift to lead to the loss of all of your funds but the rising value of RBIs, ArbiSmart’s native token means you can actually earn exceptional capital gains.
As soon as a user registers with ArbiSmart, their capital is converted into RBIS to be used by the automated platform. At any point, the user can choose to either withdraw their massive profits in BTC, ETH, or EUR or reinvest them to earn compound interest.
In the year and a half since its introduction, the RBIS token has risen by 120% and it is continuing to steadily go up in value. In fact, if it continues on its current path, the coin is projected to go up by 3,000% by the end of 2021. This upward trajectory is not only due to the increasing popularity of the platform but also to a focus on product development.
The latest addition to ArbiSmart’s financial products and services is our EU licensed interest bearing wallet, which offers interest rates that can exceed 45% a year. As with many DeFi products, in return for providing liquidity, you can benefit from a high yield on your investment. Closed accounts earn a better return, with an extended lock on the savings generating a higher interest rate and for funds converted into RBIS, the yield is even greater.
DeFi clearly has a lot to offer as an innovative development in online financial management. Returns can be exceptional and the system is fast, accessible, and versatile. However, users may be exposing themselves to higher risks, as well as lack of oversight and protection.
Companies like ArbiSmart are meeting the needs of the crypto community like never before. With a hybrid approach that takes the best aspects of both the traditional and more disruptive financial systems, we are able to offer unmatched security, efficiency, and profitability to every type of crypto investor.
Coinbase unwilling to participate in Spark’s airdrop
Coinbase has remained silent about participating in Flare’s spark token. Some users could end up missing on free XRP tokens Coinbase’s camp has been tumultuous over the past few weeks, from the removal of margin trading from its Pro platform, to the CEO’s tweet about a planned regulation on crypto wallets. However, a new development […]
Coinbase has remained silent about participating in Flare’s spark token.
Some users could end up missing on free XRP tokens
Coinbase’s camp has been tumultuous over the past few weeks, from the removal of margin trading from its Pro platform, to the CEO’s tweet about a planned regulation on crypto wallets.
However, a new development has gotten XRP traders talking as they have refused to join up in the imminent airdrop from Flare Network.
Flare network have stated that Coinbase’s participation is highly unlikely. The addresses of all XRP users that would be benefiting from the airdrop will be made on the 12th of December. By implication, it would be too late for the token’s support to be enabled on their platform.
Thus, Coinbase users will end up missing out on the free Ripple’s XRP token.
No airdrops for Coinbase and Kraken users.
XRP has been available on Coinbase since the second month of 2019. From that time, it has accumulated over $1.9 billion worth of token.
However, its refusal to comment on the Spark airdrop suggests that some of its users might not know about it. Invariably, their users would miss out on the free tokens that Ripple holders are entitled to get at a ratio of 1:1.
Flare Networks have specified that other users will be getting any token that’s unused.
Other top Exchanges like Binance and Bitstamp have announced their participation in the distribution of the token already.
Kraken seems to have followed in Coinbase’s footsteps at its support team posted on Twitter that they were not planning to support Flare Network’s airdrop. They advised their users to withdraw their coins and put them in wallets that they have control of. They also stated that they had no plans and are not obligated to credit anyone with airdrops that have or will occur.
Ethereum appeared to form a strong region of demand around the $500-zone, a bullish development for the crypto’s long-term outlook. In fact, ETH has been climbing steadily over the past few days, something that could be bullish for a part of the altcoin market. And yet, taken individually, some of these coins had a short-term bearish outlook.
BSV was forming a bear flag, with the ascending channel representing the flag of the pattern and being formed on the back of falling trading volume.
The level at $172 has acted as strong resistance in recent months, with BSV struggling to flip the level to support since losing it in early September.
The short-term momentum was bullish, with the coin forming a series of higher lows over a lower timeframe. If a trading session closes above $177 in the coming days, the bear flag would be invalidated.
A break to the downside on the back of strong volume would see BSV drop to as low as $150.
The Fibonacci Retracement levels showed likely places of support for the price. ETC wicked down to the 61.8% retracement level, and even dipped as far down as the $5.59-support level.
Since then, the price has ground its way north on the back of falling volume. While the volume has been greater in comparison to the accumulation phase before 16 November, the volume paled in comparison to the volumes of the previous week.
Hence, while the MACD formed a bullish crossover under zero, the level of resistance at $6.42 and the 38.2% retracement level at $6.5 can offer stout resistance to ETC’s advances and push it back down towards $5.74 in the coming days.
Curve Finance to Distribute Almost $3 Million in Fees
Following the outcome of a community poll, DEX platform Curve Finance is set to distribute $2,631,601 in fees to its governance token holders. In May 2020, Curve revealed that it would decentralise its platform. Governance was by means of its governance token, CRV. The company would deliver tokens to users based on how much liquidity … Continued
Following the outcome of a community poll, DEX platform Curve Finance is set to distribute $2,631,601 in fees to its governance token holders.
In May 2020, Curve revealed that it would decentralise its platform. Governance was by means of its governance token, CRV. The company would deliver tokens to users based on how much liquidity they had provided to the protocol since its launch in January 2020.
The distribution announcement, which came on Nov 27, marks a new frontier in the growth of DeFi. It demonstrates the success of a decentralised governance mechanism over a decentralised liquidity farming platform.
Curve’s road To distributed governance
On Aug 24, BeInCrypto reported that Curve’s first governance vote did not go as well as planned. Voters criticized the voting protocol. Effectively as much as 70 percent of total voting power lay with founder Michael Egorov. Curve remained popular in the yield farming space, though, due to its Automated Market Maker (AMM) technology.
Curve launched initially as a decentralised exchange supporting stablecoins and yield farming. It became a highly sought-after DeFi token in August when a community user correctly deployed a CRV token protocol. By popular demand, the protocol was then adopted by the platform.
A week-long voting exercise began on Nov 20. The result of the vote and the subsequent execution of the community decision provide a shot in the arm for the growth of decentralised protocols by demonstrating the practicality of distributed governance.
Voters included 49.75 percent of the total eligible voting pool, with the decision going through unanimously. According to Curve, payment of the fees will occur on Nov 30. Subsequent fees will be remitted weekly to platform governance token holders going forward.
Curve’s burgeoning growth
Despite the aforementioned voting protocol teething issues and a significant dropoff in Total Value Locked (TVL) on the platform toward the end of October, Curve has surged in recent weeks. It currently boasts a TVL above $900 million. Curve is the 6th most popular DeFi protocol in existence.
David is a journalist, writer and broadcaster whose work has appeared on CNN, The Africa Report, The New Yorker Magazine and The Washington Post. His work as a satirist on ‘The Other News,’ Nigeria’s answer to The Daily Show has featured in the New Yorker Magazine and in the Netflix documentary ‘Larry Charles’ Dangerous World of Comedy.’ In 2018, he was nominated by the US State Department for the 2019 Edward Murrow program for journalists under the International Visitors Leadership Program (IVLP). He tweets at @DavidHundeyin