Why decentralized financial tokens are skyrocketing today

Decentralized financial tokens like Solana (CRYPTO: SOL), Uniswap (CRYPTO: UNI), Chain link (CRYPTO: LINK), and Speckle (CRYPTO: POINT) have a euphoric day. They are up 16.25%, 10.61%, 8.61%, and 20.07%, respectively, to $ 119.62, $ 28.57, $ 26.78, and $ 29.68 in the past 24 hours. Important developments are coming in these DeFi networks, which are solidly supported by fundamentals.

Investors have high expectations for Solana, which today heralds a mysterious ignition event. Users speculate that this will either be a token burn event similar to the share buyback or a major infrastructure upgrade. Solana is a popular hub for creating a DeFi infrastructure.

Image source: Getty Images.

Uniswap, a decentralized exchange (DEX) popular for trading altcoins, has quickly gained popularity with American investors. Due to unique US regulations, fiat-to-cryptocurrency exchanges such as Coin base (NASDAQ: COIN), cannot list altcoins for trading. So the only way to invest in this lucrative asset class is to use crypto-to-crypto exchanges like Uniswap. The platform has enabled more than $ 386 billion in trading with more than 1.5 million users since its inception.

As for Chainlink, cryptocurrency derivatives trading platform Bingbon began using the network on Aug. 30 to integrate real-time asset price feeds into their platform. Since its inception, Bingbon has enabled over $ 171 billion worth of derivatives to be traded in over 100 countries. Chainlink is the world’s leading Oracle token that connects blockchain data to real world application programming interfaces (APIs) such as financial data, socio-economic statistics, weather forecasts, and more.

On the same day, Parallel Finance, one of many projects on the Polkadot Internet of Blockchain (IoB) network, raised $ 22 million in Series A venture capital. Polkadot enables multiple blockchain networks to communicate and share assets.

so what

If it had occurred to someone a few years ago that one day parties without a central authority (such as corporations, governments, etc.), like the tech unicorns of Silicon Valley, DeFi networks are now quickly disrupting traditional finance. For example, the annualized value of transactions between users of decentralized apps (dapps) in DeFi networks, namely ether (CRYPTO: ETH), has reached a staggering $ 158 billion. This includes video games, online casinos, DEX, marketplaces and more.

Meanwhile, more than $ 20 billion worth of capital has flowed into decentralized peer-to-peer lending platforms such as Aave (CRYPTO: AAVE). Aave gives everyday investors access to a financial product that was previously only available to wealthy investors – asset loans. Users can mortgage their cryptocurrencies like ETH and get a stablecoin loan to cover their daily living expenses as their investments grow. The smart contract functionality guarantees lenders collateral in the event the borrower defaults – resulting in very low interest rates.

DeFi democratizes another market that is normally only reserved for wealthy private individuals: the visual arts. Non-fungible tokens are certificates of ownership for digital assets such as images, videos, etc. that are traded on the blockchain. The main platform for NFT transactions is opensea.io, which had a trading volume of $ 1 billion in August alone. When NFTs are classified as Intangible assets, users can hire an appraiser to certify their worth, donate it to a charity, and deduct their full market value (including their capital gains) from their ordinary income Tax debts usually offset over several years. As a result, their popularity is increasing, and anyone could theoretically do so, as the NFTs trade for just 0.01 ETH.

What now

The DeFi rally is far from over. So far, it has been impossible to securely and efficiently transfer sensitive personal data such as copies of driver’s licenses, passports, police reports, court documents, etc. over the blockchain without disclosing their data to the public. But such data is required for many financial products.

That is no longer the case. Last year a group of researchers in South Korea found a way to kill three birds with one stone with the next generation zk-SNARK Encryption: Disguise the sensitive personal data of images, allow other participants to check their authenticity without Disclose the underlying information and reduce its size so that it is suitable for the blockchain. This means the next wave of DeFi, such as decentralized peer-to-peer health, home and auto insurance products, is now possible. Be sure to keep an eye out for these promising tokens as the sector is going through the next revolutionary phase.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

Comments are closed.