Decentralized Finance, or DeFi for short, is the most popular category of blockchain applications at the moment. The amount of capital locked into DeFi platforms currently exceeds USD $28 billion, according to popular data aggregator DeFiPulse. This is because, besides its genuine potential to transform traditional, centralized finance, the space is ripe with speculation. A condition that begs the question: How can you participate in DeFi while minimizing risk?
In a nutshell, DeFi platforms are internet protocols that provide financial services without intermediaries. Their services rely on programs known as smart contracts that allocate, distribute, and operate on digital assets in an automated way. This makes way for both well-known and entirely new financial instruments that range from collateralized loans to new and experimental forms of peer-to-peer financial operations.
Let’s go over a few popular DeFi applications to get a better understanding.
The Polkadot network is a blockchain designed to support specific applications in separate chains. The network itself is maintained by incentives that make use of DeFi concepts. Its native token can be used for voting on internal governance, staking, and bonding. DOT has grown 66.27% compared to BTC in the past three months.
Chainlink is a decentralized oracle network. Its services are central to building prediction markets on the blockchain because it functions as a source of verified, real-world, off-chain data. Smart contracts rely on their feeds to determine their outputs. Although LINK hasn’t grown compared to BTC in the past three months, the comparison shows a growth of 122.77% for the past year.
Uniswap is a popular decentralized exchange. It’s services are used due to its simple implementation of an automated market maker algorithm (AMM) that solves liquidity issues on any trading pairs. The UNI token has grown +297.80% compared to BTC in the past three months.
SushiSwap is a fork of Uniswap which also provides incentives for liquidity providers. The SUSHI token has grown 934.13% compared to BTC in the past three months.
Filecoin is a utility token designed as an incentive for the InterPlanetary File System. It is used to maintain a decentralized storage network that pays storage providers who share their memory capacity on an open platform. The FIL token hasn’t presented gains when compared to Bitcoin in the past three months, however, it offered a 297.56% ROI in 2020.
Despite their great potential, it’s clear that all these new decentralized financial applications are experimental in nature and require a certain expertise to understand. In order to participate in their growth, users and investors are often left sifting through complicated white papers and technical specifications. The blockchain space is known for its lack of friendly user experiences.
Luckily, there are better ways to gain exposure to these promising digital assets. Wisebitcoin offers professional and amateur traders alike the opportunity to buy futures in any of these assets. This way, potential investors do not have to become users nor participate in the direct risks of any experimental blockchain platform in order to make successful investment decisions.
On Wisebitcoin, traders have access to up to 100X leverage on contract trading, a feature that is not offered on popular cryptocurrency exchanges. These markets are available for DOT, LINK, UNI, SUSHI, FIL, and others. More so, the exchange counts on a cloud ecosystem that serves over 1.2 million end-users with $6+ billion in 24-hour trading volume. Wisebitcoin opens up new possibilities for traders who wish to participate in DeFi and the future of blockchain and digital assets.