What is DeFi Token Development & How DeFi Tokens are Classified? DeFi Token Development As we well knew that Decentralized finance so called as DeFi plays a vital role as of now. As well, DeFi has deviated all the businesses more effectively and also led for the reliable and efficient transaction. Eventually, all the business verticals and sectors have come to comprehend their potential as well as taking steps to endorse in their business to boost their customer engagement. Although with the special application over the application over the financial sector, DeFi is believed to completely change the fintech sector with their unique functionality and operation ways.
Classification of DeFi Tokens DeFi token development is transported in a way that seamlessly transferable and cryptocurrencies transparency is maintained. Even Though cryptocurrency is an asset, the DeFi tokens are developed by the financial
format that stays on the blockchain. Moreover, DeFi undergoes lending, staking and borrowing for blockchain users. To finalize, several experiments have been undergone on DeFi token development. Based on that, DeFi tokens have been categorized as the following. ● Fee Tokens ● Governance Tokens ● Collateral Tokens
(i) Fee Tokens Fee tokens are DeFi tokens devised to claim a set percentage of fees that is caused by a specific DeFi protocol. Every DeFi protocol captivates the users usage fees. To point out, the protocol developers of DeFi can assist to design the fee token in a way which can be distributed as stable coins or the native coins of the DeFi protocol. Besides, this can also be left for token holders to pick how the fees can be accumulated by them. Also, a buy and mechanism can be utilized to make the fee tokens evolutionary in nature that lets to embellish the tokens value. Eventually, the DeFi tokens are utilized to enable fees and cash flow basis and aid users to enhance the protocol in comparison.
(ii) Governance Tokens These tokens became very fabulous with users who are very fascinated in the DeFi protocol growth. That’s because the Governance tokens give holders the governance rights like how the project will develop over time. The main developers of the DeFi protocol come up with a way to change and the community can utilize the governance tokens for the proposals voting. Sometimes developers associate the governance tokens and fee tokens functionality in a single token.
(iii) Collateral Tokens These are the tokens whose price is attached to the price that the DeFi protocol is trying to manage. This is more vital for protocols where in the creation of synthetic assets. Due to these assets, it sometimes might happen where there is no additional collateral for the asset’s peg resort that was developed synthetically. When this happens, the network is utilized for liquidity and peg restoration.