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Because matter: The decentralized finance (DeFi) movement has sparked renewed interest in the cryptocurrency market. With Bitcoin worth averaging $ 10,000 over the past year, the lack of major cryptocurrency events such as a halving episode has led to some stagnation. The emergence of DeFi networks saved the day.
These decentralized platforms encourage bundling of digital tokens to provide liquidity to financial services in exchange for interest. Thanks to the immutable blockchain, DeFi projects, which are mostly powered by the Ethereum network, allow cryptocurrency enthusiasts to lend high-interest funds and take microloans through peer-to-peer network setup.
The DeFi concept is based on the visionary principles of the pseudonym Satoshi Nakamoto, the creator of the Bitcoin network. They include transparency, financial inclusion and accessibility. With no centralized control, only an anonymous account is needed to access DeFi services. This is a big plus for cryptocurrency fans who value privacy and one of the main reasons why major crypto projects advertise Defi products alongside their core offerings.
Many of them are rebranding into DeFi to trigger token price jumps. Similar enthusiasm and subsequent price trends were last seen during the cryptocurrency price boom of 2017. It led to Bitcoin hitting the $ 19,500 price point.
Tron TRX is among the latest coins to experience a sudden bullish trend following the launch of a DeFi product. The digital currency rose 60% last month after Tron unveiled the DeFi Sun Genesis Mining token. Sun Genesis is wagered using Tron’s TRX coins. Staking is the process of holding a designated digital currency to earn interest. The practice is referred to as Yield Farming in crypto circles. It increases the demand for staked coins, thus causing a price spike.
The Sun Genesis Mining token was announced by Tron founder Justin Sun. (Image: Qz)
The Sun Genesis Mining token was announced by Tron founder Justin Sun as a coin designed “to promote the vigorous development and possibilities of TRON’s DeFi self-governing community.”
More innovative DeFi projects have sprung up. The Tao Network is among the latest companies to get on the DeFi bandwagon. Its blockchain-based platform allows music deals to be made directly through its decentralized system. According to its most recent announcement, it is “building the DeFi of entertainment”.
Among the biggest supporters of DeFi right now is the popular Binance exchange. The platform’s US subsidiary recently joined the Chicago DeFi Alliance to better contribute to the country’s current movement. Binance publicly supports BurgerSwap, an automated market making (AMM) platform where users earn Burger tokens on coins staked. According to tracker DeFi Pulse, the ecosystem is snowballing. It currently has over $ 11 billion in locked cryptocurrency assets.
Current risks associated with participating in DeFi projects include susceptibility to carrier attacks. Prices of frozen primary assets can also change without warning and lead to losses. Finally, the lack of regulation around the mill environment increases the likelihood of encountering DeFi scams.
Image credit: Forbes
