Things are heating up! The cryptocurrency market had been looking bullish until recently. As Bitcoin reached new yearly highs week over week in 2020, and EOS crossing the $5 billion market cap mark for the first time since July last year. Basically, this year has been good for crypto up until now. Bears who weren’t as optimistic about a continued rally up are patting themselves on the back for having taken profit. Those who didn’t sell in hopes of a continued rally up are now stuck with a difficult decision. People have bills to pay in the real world, thus there is a need for them to sell their crypto assets. More especially now that many aren’t able to go to work due to the coronavirus pandemic. I hate referring to the virus but it has managed to stay relevant in many aspects of society. Anyway, it is this connection between the world of cryptocurrency and the needs of the real world that has seen a rise in demand for Decentralized Finance (DeFi) platforms.
Decentralized Finance is the alternative to traditional financial institutions. Users can claim back control over their assets by breaking free from the controls previously set by these financial institutions, defying their outdated rules. DeFi provides fair and clear conditions that apply to everyone regardless of their account balance and it provides transparency as to how users’ funds are utilized within ecosystems of these platforms. However, not all DeFi platforms are built the same. If you were around during the Bitconnect days, then you know how important transparency is for a DeFi platform. It is of utmost importance to have someone to hold accountable should things take a turn for the worst.
[Note: I highly suggest you research Bitconnect as a case study if you aren’t familiar with it. It is a prime example of what can happen when a financial platform isn’t transparent about its operations. Bitconnect is still to this day the biggest financial platform to ever operate in this space. At its peak it had a market cap of over $2.5 billion. An impressive feat for a single platform, but unfortunately it later shutdown taking off with tens of millions of people’s monies.]
Bitconnect is the prime example of what a DeFi platform shouldn’t be, if I even dare call it a decentralized platform. In many ways it is similar to how many financial institutions operate in the real world today. Average users have no idea of what’s going on behind the scenes and when that mirage finally collapses, they have no recourse. This was evidenced in the global financial crisis of 2007-08. Events that inspired the birth of a new transparent system – Bitcoin, otherwise blockchain.
We’ve come a long way since the events of the global financial crisis in 2008, and Bitconnect in 2016-18. The blockchain space today has a lot more credibility; with real platforms that offer real value to their users. An increase in blockchain regulation from governments across the world has played a huge part on that front, plus the fact that blockchain users have since become more knowledgeable about the space in general. Global finance is facing yet another crisis, one that’s similar to events of twelve years ago. If history is anything to go by then people, once again, will start looking for alternatives when this is all over.
DeFi on EOS
There are plenty of DeFi projects out in the blockchain space, but since EOS(IO) is the most scalable and best performing blockchain out there, well… It certainly is the only public decentralized blockchain most capable of supporting mainstream adoption.
DeFi platforms deployed on EOS provide anyone in the world access to financial services. Anyone with access to a smartphone and an internet connection is afforded investing, saving, lending, and borrowing services. One in every three people in the world own a smartphone and roughly the same number of people have access to a bank account. However, there are huge gaps between different nations with regard to interest rates and/or fees charged on each transaction.
REX (Resource Exchange)
Whereas EOS DeFi platforms break the boundaries of nations and places everyone under the same environment. DeFi on EOS is still highly underrated compared to other blockchains. Having been deployed less than two years ago, EOS has made great strides on many fronts, financial services is one of them. EOS’ biggest DeFi platform is one that every EOS blockchain user interacts with one way or the other, and it is called REX (Resource Exchange).
[Note: The image above highlights where EOS DeFi platforms would place if popular decentralized finance tracker defipulse.com wasn’t
slacking, if wasn’t biased, it’s just an oversight. They’re site currently doesn’t show any of EOS’ DeFi platforms. Suspicious Curious.]
Anyway, as you can see from the numbers the magnitude of REX is astounding. Less than a year old and REX is already challenging the top spot. REX goes far beyond what any other financial service provides, whether it be traditional banking or DeFi. As the name suggests, users on the ‘Resource Exchange’ can lend and borrow (exchange) EOS network resources with other users. Because EOS is set up sort of like an operating system, resources become a valuable asset for deploying applications and carrying out actions on its network.
You can find out more about REX here
Other DeFi projects include Equilibrium, a multichain framework for crypto-backed stablecoin and DeFi products. With this framework the community can develop DeFi applications or products on top of it. One such product is the Equilibrium EOSDT (gateway app) that allows users to generate Equilibrium-based stablecoins pegged to the USD by using EOS tokens as collateral. Users can then lend themselves these newly generated EOSDT stablecoins using EOS as collateral. In times of a decline in cryptocurrency prices, having access to stablecoins can act as a safe-haven from market destabilization.
You can find out more about Equilibrium’s EOSDT here
Vigor.ai is a new entry to the EOS DeFi ecosystem and offers a dynamic decentralized finance product. It has a Decentralized Autonomous Community (DAC) that’s tasked with the building and deployment of the stablecoin platform. This DAC is elected by members of its community to run the project but once complete it will be run by the users. The Vigor platform will enable usage of whitelisted EOS native tokens (altcoins) as collateral for borrowing loans in the form of its VIGOR stablecoin. To adequately compete with financial institutions, some of the features of this platform will include on-chain risk management and compliance to Solvency II insurance regulations. Also featured is derivative pricing to simplify user experience when dealing with products that involve volatility risk, structured product specification, market based price discovery, and much more. All whilst keeping things simple and user friendly.
You can find out more about Vigor here
xNation is a DeFi platform that helps bring liquidity to EOS and tokens based on the EOS blockchain. The beauty of this platform is that it is community focused. Any enthusiast of any EOS project can help create liquidity for its tokens by creating a pool in which to deposit their tokens. Other holders of this token can then also contribute their tokens into this pool to further increase liquidity. People who are interested in owning said token can exchange tokens of a different project for tokens of this new project. This is more of a C2C (community to community) exchange, that unites different communities into a single ecosystem, literally. Projects no longer have to depend on exchanges to list their tokens, they can just harness the power of their communities to make tokens available to the wider blockchain community.
You can find out more about xNation here
Chintai is a DeFi ecosystem for leasing, issuing, trading, and managing blockchain based digital assets. Their token leasing service allows users to earn interest by leasing their unused token utility to those who need it. Since launch in Oct 2018, Chintai has gone to offer other services such as Non-Fungible Token (NFT) leasing, a automated resource allocation service and is currently working on a regulatory compliant decentralized exchange (DEX), amongst other services. Chintai also offers the only fully on-chain, configurable, high-performance order management system (OMS). This system allows for other projects to build transparent on-chain platform, further strengthening the DeFi ecosystem.
You can find out more about Chintai here
DeFi covers everything that has to do with finance but does it in a decentralized and often transparent manner. Everything from decentralized derivatives platforms to decentralized exchanges form part of the DeFi industry. This industry offers superior functionalities and benefits to its users compared to its traditional (centralized) counterpart. These EOS platforms can be diverse and complex in their technicalities but when it comes to functionality and interface; the design becomes simple enough for the average person to interact with them. And there’s a couple more where these came from.
Earlier I mentioned access to financial services for anyone anywhere in the world. But there’s also other benefits such as the ability for individuals to create fungible assets (stablecoins) and then borrow those same assets using cryptocurrencies as collateral. For the first time in the history of finance anyone has the ability to borrow, lend, exchange, and trade assets directly with people across the world in an instant without having to trust or verify their identity. By utilizing the EOS blockchain, DeFi can offer its users a far superior service compared to traditional finance institutions because of EOS’ near-instant, fee-less, and instantly verifiable transactions.
There’s no longer a need for middlemen, banks or bank accounts. People can make peer-to-peer transactions without needing to know who the other person is. Trust is built at the core of these blockchain platforms and are vetted for accuracy by a global community of developers. All you need to access this border-less financial system is a smartphone and an internet connection. That’s it!
Thank you for reading!
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