DeFi – The Latest Flag Bearer of Team Cryptocurrency with a Mighty Wave

Have you already encountered any of the following processes in our present financial system.

1. Borrowing and lending cryptocurrencies and digital assets and earning interests on exchanges.

2. Placing bets by predicting the outcome of popular events such as elections.

3. Creating and exchanging derivatives using oil, gas, precious metals, currencies, and other real-world assets.

4. Acquiring fiat or commodity-pegged stablecoins

If you say yes to any of the following, you just stumbled on a DeFi application.

DeFi, or decentralized finance, is currently at the forefront of the cryptocurrency realm positioned to disrupt and recreate conventional financial systems into various decentralized ways. Borne over a decade ago out of the bitcoin and blockchain digital technologies, DeFi was first known as an open finance protocol that allowed transactional records to be spread to participating entities.

It is in contrast to centralized, controlling sources that clog processes as transaction volumes increase, disengaging clients and users power over their funds and assets. These processes are further slowed down by third-party players such as banks, lawyers, and the government.

The power of DeFi is drawn from smart contracts built on the Ethereum platform where countless other DeFi applications were created to cater to more complex services other than mere transactions. Smart contracts contracting parties including the release of payment.

The popularity of DeFi can be seen in the applications operated by decentralized exchanges online to facilitate the exchange of currencies in digital or fiat form.

These DEXs allow users to connect directly to other users in trading without the need for any intermediary. Lending platforms make use of smart contracts that self-manage lending procedures and do away with banks. DeFi is a collateral-based lending where a user puts up ether as collateral before taking out a loan without the need to release vital and personal information and accompanied by a credit score.

DeFi is also tied to the concept of yield farming for advanced traders who are into high-risk investments by scanning different tokens for potential ROIs. A very popular form of yield farming is liquidity mining where free tokens are given to attract new users.

DeFi is also called lego money because decentralized apps, or dApps, can be stacked together like legos to build financial products for a maximized ROI. Since the codes of DeFi apps are open and public, anybody can access them and build new apps from their codes.

Aside from the above-mentioned advantages of using DeFi that are causes of its surge in popularity, is the seriously growing participation of institutional investors that is leading to further trust and confidence in this nascent technology.

What’s more, it will be able to reach out to the unbanked and underserved and help them finally open accounts that were denied due to stifling banking requirements.

As many believe in DeFi’s potential to disrupt present systems, skeptics are not yet sold to the idea it proposes. First, smart contracts stand the risk of hacks. Brilliant as it is from a technological standpoint, smart contracts, once verified, cannot be undone and undetected bugs can be a constant risk due to that immutability.

While many are conceptualizing idealistic visions of the future due to DeFi, mainstream adoption is still way ahead. Problems of security and scalability still challenge that developers need to surmount before there is widespread usability. But we cannot discount the fact that DeFi is surely gaining ground in terms of its convergence with other services as DeFi is being perfected.

Xion Global is trailblazing the path of DeFi and eCommerce convergence like no other. For example, deploying DeFi’s smart contracts to every purchase makes possible direct-to-consumer retailing, thereby eliminating middlemen in the process.

The groundbreaking concept of Xion Global in maximizing the power of DeFi into eCommerce will empower practically anyone to start a business within the Xion ecosystem from the supply chain to the retail chain.