What Will It Take For DeFi Protocols To Seize The Future of Loan Payments?

What Will It Take For DeFi Protocols To Seize The Future of Loan Payments?

To be sure, blockchain rose to the world stage on the back of Bitcoin's remarkable performance. However, blockchain technology is gaining its significance, especially after the cryptocurrency ecosystem nearly collapsed in 2018. Today, the technology anchors around three primary use cases: staking, custody, and DeFi. Decentralized Finance (DeFi) is particularly interesting because of the waves it is making.

To be sure, blockchain rose to the world stage on the back of Bitcoin's remarkable performance. However, blockchain technology is gaining its significance, especially after the cryptocurrency ecosystem nearly collapsed in 2018. Today, the technology anchors around three primary use cases: staking, custody, and DeFi.

Decentralized Finance (DeFi) is particularly interesting because of the waves it is making. DeFi protocols such as Compound are taking the world by storm as more people realize how the ecosystem could revolutionize the global financial ecosystem. Just last month, Compound topped MakerDAO as the most valuable DeFi lending project.

Overall, the DeFi ecosystem’s trajectory is steepening upwards as more value is locked in DeFi projects. To put this in context, consider the value locked in DeFi projects in the last 30 days. In the period, the total value locked (TVL) in DeFi jumped 119% to settle at $2.279 billion. If this growth cannot convince one to onboard the DeFi ecosystem, then nothing will. 

Source: DeFi Pulse

A New Era is Unreeling

Admittedly, there is a wave of DeFi protocols, but most are still in the abstract realm. Few protocols such as MakerDAO and Compound have been able to go live and to attract investors. These software pieces are coming up with solutions to problems that have plagued the legacy financial system for ages.

DeFi lending protocols enable users to access credit cheaply. On the other hand, lenders can earn high-interest rates on their investment. Importantly, the majority – if not all – of the DeFi developers agree that the protocols will right most of the ills of centralized finance (CeFi). There is a need for an alternative to traditional finance from the foregoing, one that serves all participants in good faith.DeFi lending protocols are more popular today because they enable everyone to supply cryptocurrencies and stablecoins and to earn interest on them. This another avenue for holders of the digital currencies to earn income other than trading them on exchanges

According to a report, DeFi is the fuel that will propel the financial innovations of the future. The innovations already began with the complete transformation of existing commercial products such as lending. This trustless ecosystem enables finance to reach the unbanked and the under-banked in a previously impossible way.

defi blockchain decentralization crypto cryptocurrency cryptocurrency-investment cryptocurrency-payment

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