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Is there a DeFi Revolution Coming in 2023?
The DeFi (Decentralized Finance) market has grown rapidly with over $75 billion TVL in protocols. DeFi is a reconfiguration of the financial system, allowing users to engage in peer-to-peer finance.
The crypto markets rallied to start the new year as it appears we have survived the worst of the storm.
It might be too early to declare the bear market over but there’s certainly been a breath of optimism into the sector for the first time in months. With this refound sense of optimism it’s worth asking what’s going to be the driving force of crypto in 2023 and beyond. (If you ask us… we think that will be DeFi)
Last night we dropped an article on the DeFi Revolution coming in 2023, if you would like to read the entire article check it out here
Here’s what we’ll cover in this email:
- What is DeFi
- Real Life (D’)Applications
- Future of Asset Management in Crypto
What is DeFi?
Decentralized finance (DeFi) refers to an emerging class of decentralized applications (think like apps on your phone but created through smart contracts) that aim to recreate traditional financial instruments using web3 tech stack (i.e., built on top of blockchain).
It’s peer 2 peer finance — free of middlemen, gatekeepers, or controlling governments and governed by clear programmed rules (smart contracts).
With DeFi it will be possible to take out loans, exchange value, earn yield, borrow assets, join liquidity pools, mint stablecoins and even more uses will emerge as innovation continues.
Permissionless (openly accessible to anyone)
Programmable (fully automated by smart contracts)
Transparent (traceable and trackable to a public ledger)
Non-custodial (no one can freeze or seize your assets)
Real Life (D’)Applications
There are over 12,000 DApps- a number that is growing too. It’s still early but you get how this story is going- as time goes on adoption will increase and these sorts of applications will become more and more mainstream. DApps are innovating not just in finance but also in gaming, property, security, marketplaces and media.
You can see from the chart above, the DeFi sector holds 377,000 dUAW (daily unique active wallets), as of January 2023. There’s a massive potential for growth here as more and more useful dApps are built.
For users, DeFi applications are similar to regular web or mobile applications, but they are built with smart contracts. For example, with DeFi lending, users can borrow cryptocurrency, like with a fiat currency at a bank, or lend it to earn additional interest. That’s right you now have that power, it is not solely reserved to banks or the ultra-wealthy. Now countries are even starting to offer treasury bonds on-chain (so… we don’t need banks for that either?)
Future of Asset Management in Crypto
A Multi-Chain Future Is Becoming Reality
With Velvet.Capital and our multi-chain DeFi asset management protocol, users can create all kinds of thematic, crypto portfolios, indexes & other financial products with additional yields - across assets and ecosystems. All in just a few simple clicks.
You can make your own or copy one of your favorite crypto gigabrains! The possibilities are endless. We utilize modern portfolio theory and yield farming to improve risk-reward profile & amplify your returns.
The multi-chain future (Binance, Ethereum, Polygon, Avalanche, Tron, etc.) is coming as users search for more cost-efficient ecosystems with cross-chain features. The days of Ethereum totally dominating are over. This can be illustrated in the chart above that shows the TVL growth of competing chains in the last 12 months.
You don’t need to spend time researching different cryptocurrencies, making trades and staying on top of a constantly evolving crypto market — we got you covered. Velvet.Capital provides a secure and intuitive platform for anyone.
Some Use Cases of DeFi: Another reason to be bullish on DeFi is the use cases for DeFi are going to expand and grow as the technology matures but some worth mentioning use cases are:
- Compliance & KYT purposes (know your transaction): Prevents money laundering other illicit activity through improved data analytics
- The ability to makebetter decisions from a more transparent and wide pool of data
- Insurance: protecting your assets with smart contract centric insurance solutions
Frictionless: Aside from some of the more obvious benefits of DeFi- that come with the immutability, the transparency and trackability, the permissionless nature, the programmability, and the control you have over your own assets- it’s totally frictionless. When you remove the layers of gatekeepers & intermediaries, the red-tape and bureaucracy; you create a streamlined and seamless experience that keeps people much closer to their desired outcomes.
The horrible fees, paperwork, lag times in processing requests, the incompetence- all gone!
Refer 3 friends and get a free, exclusive report on the top Crypto holdings of top Hedge Funds and Whales!
Imagine all the synergies that come from savings on fees, administrative costs, regulatory hurdles, time, energy and worry! You no longer have to rely on banks, governments, regulatory agencies, etc. to get stuff done.
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