Defi #
Let’s see what Wikipedia has to say about DeFi:
Decentralized finance (commonly known as DeFi) is an experimental form of finance that does not rely on central financial intermediates such as brokerages, exchanges or banks to provide traditional financial instruments, but instead uses smart contracts in blockchains, the most popular being Ethereum 1.
DeFi platforms allow people to lend or borrow funds from third parties, speculate on the price movement of a range of assets using derivatives, trade cryptocurrencies, insure against risks, and earn interest on savings accounts.
Certain DeFi applications provide high interest rates, but are subject to high risk. In October 2020, around 11 billion dollars was deposited into various decentralized finance protocols, which resulted in an increase of more than 10 times its value throughout 2020. In January 2021, approximately 20.5 billion dollars was invested in DeFi.
Fact about Defi #
If we read carefully, we can draw several conclusions about this text:
The first is that DeFi is a financial system that allows the user to enjoy the same services provided by the traditional financial system. That is, borrow, lend, speculate, trade or deposit funds, obtaining high interest rates. One aspect that is left out of this text is the anonymity allowed by cryptocurrencies, anonymity guaranteed by DeFi, which clearly adds value.
If we are of a certain age, we all remember those happy times in which banks paid us 3 or 4% on an annual basis to keep our savings in their accounts, providing confidentiality as well. The banks did not provide information to the Treasury about movements and users were maintaining their privacy.
Nowadays, having money in the bank has become a nightmare. Besides the fact that we do not receive any return for depositing our money, they also inflate commissions for various reasons. Apart from that, all our movements are shared with the tax office.
In our opinion, the success of DeFi relates to these two aspects. On one hand, it is very easy to obtain returns of around 20% per year on stablecoins (equivalent to the dollar, euro, yen…) and working with crypto assets provides us a high level of privacy.
On the other hand, we can see that this entire system allows us to operate using cryptographic protocols that guarantee speed, user-friendliness and no need for intermediaries.
This is very important, because in order to make an investment we will only need to sign the required smart contracts. This takes a couple of minutes and entails very low costs compared to all the signing processes and the bureaucracy that comes with the traditional system.
To our knowledge, the traditional financial system is becoming obsolete and it requires an update to join the decentralized system. We would like to promote this first step and provide a bank where we can offer the services required to work with both systems. That is our goal and priority.
- Same services as traditional financial system
- 20% per year return on stablecoins
- High level of privacy
- Speed, user-friendliness and no need for intermediaries
