What Would Make Me More Confident On DE-FI

in HODL2 months ago

Hey jess-Fi

So DE-FI or decentralised finance is a new buzz word making the rounds in the blockchain space. At the moment, the Ethreum community thinks they have a monopoly on the concept with most DE-FI platforms using the ETH chain to build their products, but it is why no means exclusive to ETH.

We will see other chains run De-fi dapps and I am sure it won't be long before HIVE-FI platforms are set up as we already have dlease and informal DE-FI services through many projects on the chain.

DE-FI, on the whole, is a great idea, it will be the future of all finance in the future as we move to blockchain and CBDC's we will see plenty of fintech companies building on both government chains and private chains.

My problem, however, is that people see DE-FI as only a get rich quick scheme both for developers, investors and there very little focus on the productive use of capital.


Productive use of capital

At the moment, lots of De-Fi platforms are looking to try and either pay you via inflation or the difference between leaning and investing currencies for collateralised loans. It's by no means revolutionary concepts the banks built their entire business model on this which shows you the upside potential and the growth for this sector.

People are looking for capital when they are cut off by certain centralised institutions, and others are looking for yield. At the moment in the DE-FI space, more people are looking for return than people looking to do anything productive with the capital, which is my most significant concern.

The popular DE-FI or rather CE-FI since its custodial in Block-FI, Crypto.com and Celsius Network all offer collateralised loans while crypto.com also offers payment services with a fee involved. Both are very similar to banks, but with a smaller middle man, there are favourable terms for investors.

However, its only one use case, a loan against your crypto, eventually loans of this type will reach its peak, and new products with more risk will have to be introduced to keep the yield coming in.

Possible uses for De-FI capital

As I mentioned, we need to look to the future with more productive uses for DE-FI. Perhaps using the grouped capital to buy things like corporate bonds/debt with a good track record, such as investment-grade bonds.

The pooled capital could be used to fund small businesses or support VCs and angel investors so you et a small piece of a range of companies in their portfolio and hope for an exit and return on your equity.

This could give people access to markets of return that were previously closed off to them and drive better capital allocation over time.

DE-FI drives the need to HODL

DE-FI helps you create different passive income opportunities with you crypto other than a hedge against inflation. While HODL'ling will be widely profitable for many who do it long term, it's not an incentive structure that is natural to us who have the recency bias of living in an inflation saturated world.

DE-FI allows people to use a deflationary asset or one that is pegged to a deflationary asset and secure additional RIO and driving a further need to accumulate and HODL long term.

Having something they understand like interest payments in a world where negative, no or low interest is the order of the day we can see why De-FI can become a popular medium for capital to flood into at this point in time.

Taking to account that the asset you investing with lets ay BTC as limited supply it only drives up scarcity if the asset is HODL'ed or wrapped and locked into smart contracts.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

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Indeed, other Defi services that are based on others are rising up. Like Defi Foundation in Singapore with its token, DFI, is offering Defi based on BTC blockchain while Tron blockchain has its own DEFI called Just. With Defi, there are definitely more financial use of crytocurrencies that may provide some stability to its grown unlike ICO bubbles in 2017. I agree that many are treating Defi as a means to generate quick income but Defi can really work like banks to provide financial assistance to everyone if things work out.


Oh I'm sure there will be more DE-FI outside ETH coming soon as this run continues no ones going to want to see their project or chain left behind in the hype. I just think a lot of it is repackaged ICO-economics and not real productive capital use, many will be pump and dumps and people need to do their research even more this time around, the numbers will be far bigger than the ICO age of that I am sure.

People are going to get burned and getting into the right projects will really see you transform your gains, it's going to be nuts, I just hope this time we who have been here long enough are smarter and know when to get out or what to avoid, because everything is going to look like a steal when it goes up

Isn't it the same as Stacking Hive or am I wrong? If I am wrong what is the difference then?

I would say staking HIVE should be considered DE-FI its just that with HIVE you get more, you get passive returns, you get curation returns and you get resources to use on the site, that's a lot more than most DE-FI projects and far more complex

DE-FI at the moment is only looking for simple leveraging of capital so putting in, giving it to someone else for them to use and pay you back with interest. Basically the banking model on the blockchain.

I do think we can bring a simple form of DE-FI to have where people lock up their HBD or HIVE to get cash or can use it as collateral to get cash, we could set up flash loans, we can also have liquidity pools like uniswap which could make HIVE based DEX's far more attractive to build and use

Okay nice!

Doesn't sound like a bad idea for "stacking" HBD or Hive for cash

Exactly we all know there are people who are just here to sell the HIVE to get cash, so why not make it easier for them but also turn it into a way that benefits us, other than putting sell pressure on exchanges and tanking the token price

Tell some of the people behind the HF to think about that. thThey are the only ones who can do anything about it :D

@tipu curate, I'll be back to read

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