Decentralized finance is by far the hottest topic in cryptocurrencies, touted as a way to make a fortune by supporting the right token, but also as a tool to take the cryptocurrency you held in a cold wallet and use it to Bringing work to earn exceptionally high interest rates.
There’s a reason DeFi grew so fast that it slowed the Ethereum blockchain, which is where most of the projects live, and increased gas prices for transactions to $ 10, $ 50, sometimes even $ 100.
DeFi is mostly spoken of in terms of taking on the banking and brokerage roles that big finance thrives on, but the technology can be used to revolutionize many other businesses, from the energy industry to e-commerce.
The reason is simple: At its core, decentralized financing is about eliminating the middleman.
Why give your money to a bank for loan – for a pitiful fraction of 1% interest – when you can lend it for orders of magnitude more through a crypto loan site?
Or invest it in a liquidity pool that uses an automated market maker to create a shared pot of tokens that cryptocurrency traders can sell or buy to instead of waiting to find a trader who wants to buy what they are supposed to the price they want to sell. The way liquidity pools work is that liquidity providers lock funds in pools to pay fees for each transaction – usually paid in an exchange’s native token.
All you really do is replace the institutions that make these transactions possible – the man who is about to take them from Jane and give them to John – with smart contracts that both initiate and exchange automate of currencies. In other words, it turns a peer-to-business-to-peer transaction into a peer-to-peer transaction.
The difference is the immutable nature of the blockchain, which makes it impossible for either side to cheat. Since it is trustworthy, you don’t have to pay a trusted intermediary to do it for you.
Financial transactions are the low hanging fruit for DeFi because they are very common and the value of the currency being traded is so great. However, DeFi can get quite complex in its trading, staking, and yield farming formats. But that’s mainly because people are willing to do very risky things like wagering on margin with money borrowed.
However, DeFi works for pretty much any data you need to move from one party to the other. It can be e-commerce, insurance, digital identity, and even electricity – the possibilities are endless. And for the most part, they’re pretty straightforward.
Decentralized energy is attracting enough interest to be given its own nickname – DeEn instead of DeFi – although it also uses DApps and smart contracts and generally lives on the Ethereum blockchain. Aside from removing the middlemen – brokers and utilities – the only real difference is in kilowatts instead of kilobytes.
A year ago, the German sustainable energy company Lition launched its blockchain-based, decentralized peer-to-peer energy exchange, which enables individual consumers to choose exactly from which source they buy their energy from inexpensive or green or local electricity producers want – whatever they want.
It is in operation and, according to a publication by the energy industry, consumers save an average of 20% on electricity costs, while electricity producers see a 30% increase in sales.
Decentralization of e-commerce
E-commerce is another field ripe for DeFi to disrupt, and one of the companies that is doing this is Uquid, which aims to bridge the gap between DeFi and e-commerce.
One of the ways it does this is through its Defito Finance branch, which focuses on customer loyalty programs that use tokens earned on every sale or purchase.
The site takes three techniques commonly used in DeFi trading, lending, and mining and tailors them to fit the needs of an e-commerce site.
Shopping Mining is a loyalty program that creates and awards newly mined tokens with every purchase made at Uquid’s many online stores that offer everything from video games and music to subscriptions to streaming services like Spotify and Xbox Live. This uses one of Defito’s native tokens, the DeFi Shopping Stake (DSS). After mining, these tokens are loaded into a smart contract that allows them to be used for future purchases from the Uquid sites or for staking in the pools of liquidity.
Defito’s other token is the DTO, a governance token that can be earned by adding liquidity to the shopping liquidity pool. Rather than allowing cryptocurrency traders to buy and sell tokens, the Defito Pools represent digital goods on Uquid’s e-commerce sites that range from games and business software to gift cards and mobile top-up cards. An automated shopping-maker connects pools of goods from different vendors so that token holders can find and track the best prices for the amount of these goods they want to buy. These sites accept cryptocurrencies as a means of payment.
Both DTO and DSS can be used for staking and payments, but DTO brings voting rights for governance, including whether DSS tokens should be burned to increase their value or used to develop the reward system.
Another DeFi token is Uquid (UQC), a decentralized ERC-20 token that can be used for a variety of more traditional DeFi services, including staking, lending, lending and token swaps, as well as commodities such as utilities, groceries and Pharmacy coupons chains around the world.
Finally, Uquid recently added a fourth token for its new NFT marketplace, NFTD. The non-fungible tokens are at the heart of a digital product marketplace where they can be used to give digital goods buyers clear ownership rights. It’s a Binance Smart Chain Utility token that targets things like social media content from TikTok and YouTube videos to photos and music, as well as other digital content from Uquid.
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