The Great Potential of Decentralized Finance in 2020 Centralized financial systems have been around for a very long time now. Centralized meaning, a single entity has full control over your funds, for example a bank or financial institution or even a government. Not having control over your own money is a valid concern for many. Remember the 2008 financial crisis? That was mainly caused due to poor decisions made by banks. For the poor decisions made by someone else, we had to pay the price in the form of the biggest recession so far. Over the years, there have been several instances where centralized financial systems have failed us. So, the idea for a decentralized form of currency was created in 2008. A year later, this became a reality when it was launched. Bitcoin seemed to be the answer to this problem. A few years after, Ethereum came along and changed everyone's perception. Even though Bitcoin is a decentralized asset, all other financial instruments were still centralized. Ethereum solved this problem by allowing people to develop decentralized financial instruments built directly on its blockchain. In short, Ethereum decentralized the entire financial industry. Before we get into the great potential of decentralized finance, let us first understand what DeFi is.
What is DeFi? DeFi stands for Decentralized Finance. In a centralized world, all financial instruments are run by financial institutions such as banks. The main problem for anyone using these facilities is that, in a centralized world, you never have complete control over your own money. These entities have full power to freeze, block, or even take (steal) your money if they want to. If you feel like you do have complete control over your money, this is a facade created by the financial institutions. This is not the case in a decentralized crypto world. Due to the advancements of blockchain technology, we are now able to create financial instruments that anyone can use. An example of such financial instruments is a decentralized lending platform where you can either borrow or lend money. Instead of a middle-man dictating the terms of the financial system, a smart contract (automated code) running on the blockchain enforces these terms. With no middle-man involved and with open source code with full transparency offered by blockchain technology, you will have complete control over your financial assets. Now that we know what DeFi is, let us now have a look at its potential in 2020.
High Performing DeFi projects:
Even though cryptocurrency is relatively new to the world, just over 10 years old, DeFi projects are very new to the crypto space; this is cutting edge technology. The benefits that they bring have made these projects extremely popular. Here are some of the most popular DeFi tokens: 1- MakerDAO (MKR): Maker DAO (Decentralized Autonomous Organization) is a decentralized lending platform on the Ethereum blockchain. On this platform, you can stake cryptocurrencies like Ethereum as collateral, in exchange for a loan. The best part about Maker is that you don’t need to complete any sort of KYC to get started on this platform, making it extremely popular for privacy advocates and blockchain enthusiasts. The easiest way for you to get some MKR tokens is to head over to an exchange such as OKEx, where MKR is one of the most traded DeFi tokens. In the past 3 months, MKR has seen a huge gain in value.
DeFi started to gain traction back in March of 2020. However, due to the global pandemic, there was a pullback. The value of MKR since then has doubled. Now would be a great time for you to get your hands on some MKR tokens. As of writing, MKR has been gaining another upward momentum after a short correction for a few days. DAI is a stablecoin on the Maker platform. Users are compensated in the form of DAI tokens whenever you borrow money on the Maker platform. If you wish to lock in the profits of your portfolio during a crypto correction, getting hold of DAI on OKEX would allow you to balance your risk exposure during high volatility that cryptocurrencies tend to experience.
Currently close to $1, DAI is relatively a safe haven asset to run for amid volatile conditions, hence the name given to it as a stablecoin. 2 - ChainLink (LINK): This is by far one of the most successful DeFi projects. Some even go as far as to say that there is no DeFi without the ChainLink project. This is a decentralized oracle project that provides other DeFi projects with accurate data from other sources.
LINK has gone on to double its value in just a month. In the beginning of July, LINK was valued at around $7. This changed quickly as the value ended up hitting all-time highs of over $19. This is nearly a 200% gain in value.
Just like most other cryptocurrencies, LINK too has experienced a minor correction and has been trading at around $16.75. The importance of this project to the DeFi world means that this is still a highly undervalued cryptocurrency. At the moment, top exchanges like Coinbase and OKEX have already listed the LINK token on their platforms.
3 – AAVE (LEND): Aave is a decentralized cryptocurrency lending protocol. This was the second DeFi project to get past the dominance of MakerDAO. The main advantage of using Aave is that you can take cryptocurrency loans with both stable and variable interest rates. Additionally, this platform also supports collateral-less crypto loans.
LEND is the token that you can use to reduce the fees that you have to pay for the loans. In just the past month, the value of LEND went from $0.40 to over $0.80. The return of investment that you would have got by investing in this cryptocurrency on OKEX is simply unmatched. The project still has a lot of growth potential, so 2020 seems to be a great year for LEND. 4 – Basic Attention Token (BAT): The Basic Attention Token project is set to revolutionize the entire advertising industry forever. The potential of this project to help advertisers in their conversion is what makes it very promising. This is then combined with Brave browser to not only help content creators but also the advertisers for better outreach. Moreover, the viewers of the advertisements get BAT tokens in exchange, making BAT a promising token for both advertisers and users.
BAT had an amazing rally up in the past month, touching $0.43 on OKEX. This is more than a 100% increase in price compared to its value in March 2020. With marketing becoming extremely important every single day, the BAT token could see another major price rally soon. 5 – Band Protocol (BAND): This is another DeFi oracle project that provides valuable data for the rest of the DeFi projects out there. What makes the BAND protocol a valuable project is its scaling capabilities. By helping DeFi projects get accurate data at extremely cheap rates, BAND helps DeFi projects operate more smoothly.
When it comes to price performance, both BAND and LINK have outperformed the likes of Bitcoin, Ethereum, and others. BAND also has rallied up over 5000% in the past 6 months. You might be thinking that it is too late to get into a project that has seen such huge price gains. However, the importance of the BAND protocol is much higher than what it is currently valued at. DeFi projects will undeniably require trusted data from other sources, making blockchain oracles very popular and in greater demand. 6 – Decentralized Information Asset (DIA): The main goal of the DIA project is to bring data providers, analyzers, and users together. Combining these three entities is extremely helpful in bringing data from off-chain sources to various DeFi applications. This demand for this trusted data is extremely important and DIA helps to achieve this. This project hit the market on August 4, 2020 and has seen immense support from the entire crypto community. The price of DIA has gone up over 200% in just the first month. The best part is that you can gain access to the DIA token on the OKEX exchange, making it extremely easy to ride its wave so far.
Advantages of Investing in DeFi in 2020: 1 – Higher growth potential: So far, DeFi projects have outdone the likes of other wellestablished cryptocurrency projects such as Bitcoin, etc. These DeFi projects simply add more utility to the crypto world. So, one just cannot ignore them as they are in a different league. DeFi is still at a very early stage. So, getting into these projects now would result in massive gains shortly for early adopters and investors. 2 – Easy to access: DeFi is an extremely hot topic in 2020. So, all these project tokens are readily available on several top exchanges, including OKEx. This means that you will be able to easily get your hands on these tokens. Some of the lesser-known cryptocurrencies are still not available on popular exchanges. So, DeFi projects have an edge over them. 3 – Trending concepts: Remember the ICO craze during the last crypto bull run of 2017? Back then putting your money on any new ICO would result in massive gains in a very short period. The DeFi situation is similar to this. While ICOs helped entrepreneurs get their ideas off the ground, DeFi is helping a much larger audience by providing financial products that you would have to use. So, investing in DeFi at this stage would be a great opportunity that can’t be understated.
Conclusion: DeFi has taken the entire world by storm. These projects have been around for over a year and have begun to get traction. They are extremely useful for a wider audience in the crypto world. The projects have seen massive gains in recent months. However, there is still potential demand for them can increase unimaginably as it’s still early. Even though some of these projects have rallied over 1000%, they have the potential to reach even greater popularity. If you want to experiment by investing into these projects, you can as they are easily attainable on OKEx. The accessibility of these cryptocurrencies on OKEx makes it even easier for them to increase in value because OKEX is such a big player in the crypto space and they are leading the way when it comes to DeFi giving investors new opportunities that they don’t currently have on other crypto exchanges.