The dream of Bitcoin was to replace currencies with software. Currency is but a small part of finance. Exchanges, savings accounts and time deposits are all larger components of finance that are being decentralized. DeFi (Decentralized Finance) is replacing CeFi (Centralized Finance.)
The thickest order books with the best priced order execution for cryptocurrencies used to be on centralized exchanges. These types of exchanges have suffered billions of dollars of losses from hacks and embezzlement. Just over the last few months everything changed. Now the best order execution in the world for thousands of cryptocurrencies is all on chain with no counterparty risk. $1.5 billion dollars of Ethereum is in the order books at uniswap.org. There is on place in the world where you can buy or sell ETH with less slippage. Exchanges have lost billions of dollars of their users’ money, it’s beautiful to see them being replaced.
The Uniswap decentralized exchange itself was popularized by the world’s first blockchain time deposit, HEX.com. As such HEX users that traded on Uniswap were rewarded for free with millions of dollars of Uniswap’s token “UNI.” Cryptocurrency is one of the few places in the world where millions of dollars of truly free money is actually handed out to users. HEX itself is freely claimable for Bitcoin holders till the 17th of November, 2020.
There’s now $13.68 billion dollars deposited in Decentralized Finance applications.The chart of value being kept in DeFi systems is going up exponentially. May 30th 2020 there was only $1 billion. 6 months later it’s now 14 times higher. DeFi is finding a product market fit that Bitcoin never found. The largest pain point for crypto users has been solved!
Few understand that cryptocurrencies are truly the fastest appreciating asset class in the history of Earth. Bitcoin is up from a penny to $16,000 now, a 1.6 million fold return in about 10 years. Ethereum is up from 30 cents to $500 now, 1,666 fold return in just 5 years. HEX.com is up 263 fold just this year!
Decentralized Finance is rapidly removing trading volume and liquidity from centralized exchanges. Anyone can deposit cryptocurrencies or stablecoins on them and become a marketmaker automatically. It’s not just the exchanges that are being replaced, but the market makers as well. In addition to the thicker order books, and removal of counterparty risk, there’s also record levels of transparency. You can see what addresses are making money, losing money, borrowing money, everything in real time publicly. It’s pseudo-anonymous so there’s no identities tied to the addresses, the best of both worlds. Transparent with privacy.
Now that one proves its potential to offer high returns with numerical facts, critics of DeFi try to bring in subjective charges. For example, HEX, as well as the environment of DeFi, is often considered technologically weak with critics hinting towards chances of fallibility in its security protocols. But, these charges are bound to fall flat. Said business had already conducted two independent security audits. Moreover, it’s economic-framework is audited by a master-mathematician and its contracts are audited by two of the most-revered contract auditors in this field: ChainSecurity and CoinFabrik.
A decentralized environment brings transparency and autonomy. The absence of a central authority, instead of leading towards a lack of regulation, benefits the users by cutting down on delays and extra costs associated with the intermediaries.