DeFi is currently the hottest trend within the cryptocurrency space, and for a reason. The sector aims to decentralize every aspect of the traditional financial industry, making services like credit, insurance, and others available to all. Services that haven't been easily accessible to all society members, especially those at the lower end and based in less developed nations. With over 1.7 billion adults unbanked worldwide, access to essential financial services that can empower them is not possible. This is where DeFi steps in as it works on decentralizing all financial services using cryptocurrencies and blockchain protocols.
Our objective with this piece is to explore some of the problems DeFi is solving and the key players offering these solutions.
DeFi Lending And Borrowing
One area that has gained users' attention is DeFi lending, where decentralized platforms have come up with products that give loans to businesses or any interested individual without intermediaries. Additionally, there are DeFi lending protocols that enable every involved individual to earn interest for committing crypto, which is lent to borrowers. One popular project doing this is Compound. The protocol allows one to lend and borrow crypto. You can lend and borrow several coins on the platform, including DAI, ETH, USDC, ZRX, USDT, WBTC, BAT, REP, and SAI. And this is awesome since you don't have to spend time, effort, and incur costs associated with dealing with traditional financial industry intermediaries. Interestingly, Compound is attributed as the chief catalyst of the ongoing DeFi boom after launching its governance token COMP back in June 2020.
DeFi Rewards And Earning
Another area that is attracting people to DeFi is potential rewards that act as incentives to boost the adoption of these protocols. And there are plenty of ways to earn and get rewarded within the sector, including through staking and locking coins on liquidity pools. The problem lies in the proliferation of such platforms that offer such rewards, making it a daunting task for the average user to reap the rewards. An activity like yield farming where you commit crypto to a liquidity pool for a given period to earn rewards can be highly lucrative but involves complex strategies.
It's the desire to simplify this earning process for all that has led to the birth of Cocoricos. This platform serves as a suite for various DeFi products. It makes it easy for users to be rewarded using different assets on different protocols such as reputable liquidity pools, staking, and airdrops. By accessing the platform's token, EGG, you can stake any asset you hold to any desired liquidity pool for rewards. You had to take several steps to achieve this goal in the past, but now it's simple. All one needs to do is convert their crypto to EGG and then proceed to stake wherever they wish. Or you can purchase EGG on the project's official website and continue from there.
Additionally, the platform does recommend the best investment options available to its users, such as where to stake for the best returns. These recommendations are data-driven through the use of sophisticated algorithms, making them quite accurate.
DeFi is a relatively new market that is yet to mature. People are still trying to figure out different things. For now, it offers great rewards. For example, interests earned from staking and yield farming beat anything offered by institutions like banks for savings by miles. But with great rewards, there is a significant risk. That's why we have projects like Cover Protocol that helps users hedge against fallacies that could exist within smart contracts. The cover will protect your assets from losing value when staking or farming, additionally, against hacks and bug exploits.
This is only possible through due diligence on the platform's side. It doesn't allow just any DeFi protocol without assessing various factors such as security, TVL, and other necessary features before determining user risk levels.
Today there are over 3,423 DeFi tokens with a market cap of over $25 billion. These tokens belong to various projects that offer users access to all sorts of financial markets from lending, derivatives, payments, tokenized assets, decentralized exchanges, alternative savings, staking, and many more. Over the past year, these protocols have grown in popularity with the masses, as you could expect since they have created opportunities for individuals to benefit that wasn't possible before. This popularity is reflected in the total value locked (TVL) on various protocols, which stands at over $20 billion. A figure that is 20 times more than what it was just a year ago, and it seems like we are just getting started.