![]() At first, the sites amounted to experiments on the outer edges of the crypto universe, but in 2020 they have started to attract real money. Most of these sites-notably Compound and Maker-rely on a decentralized network of lenders and borrowers, who use smart contracts to arrange collateral and payment terms. Instead, they can turn to a variety of websites that let people loan out their cryptocurrency, often for high rates of interest. But unlike the crypto mania of 2017, savvy traders don’t have to rely on swings in asset prices to earn a return. Like Bitcoin, the broader world of DeFi is fueled by a libertarian worldview, and a thirst for money. If you want to send, lend or borrow money you don’t need to join a private network like PayPal or Fedwire or a bank” says Peter Johnson, a former Morgan Stanley banker who is now an executive at Chicago’s Jump Capital, a firm that specializes in fintech and cryptocurrency. “The simplest way to describe DeFi is as an open financial network. Trading and lending arrangements are overseen by so-called smart contracts, which serve to enforce whatever deal-perhaps a 6 month loan at 5% interest-two parties have struck on the platform. Like Bitcoin, these services don’t require anyone’s permission to use, and can be accessed around the world. This includes exchanges and websites that broker crypto loans, letting crypto holders earn interest on their stash. What’s new this time around is that a set of equally decentralized infrastructure has grown up around Bitcoin, Ethereum and other cryptocurrencies. The term is relatively new but the underlying idea is not: For more than a decade, Bitcoin supporters have touted it as decentralized form of money overseen by blockchain software rather than a central bank. If you take even a casual interest in cryptocurrency markets, there’s a good chance you’ve heard the term DeFi, which is short for decentralized finance. This time around, more players from the traditional finance world are participating, while two new buzzwords-DeFi and yield farming- are driving a new surge of investment. This new wave of investment-or bubble if you prefer-has echoes of the 2017 craze, but also represents a new phase for the rapidly maturing cryptocurrency industry. And earlier this month, a novelty currency called YAM began trading at over $100 right after it appeared, only to crash to around $1 days later. In recent months, speculators have rushed to snatch up digital coins with names like COMP and LINK that are now among the most popular cryptocurrencies, with market caps suddenly worth billions of dollars.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |