Decentralized Finance (DeFi) Development empowers the Fintech arena on the whole. How so? You may be surprised! The most spoken Decentralized Finance can be mentioned as a combination of financial services in Decentralized environment. The Smart contracts integrated DApps makes the DeFi system one of the most transparent, secured, trustworthy and efficient system.
We, Pulsehyip one of the most experienced DApp and Smart Contract Development Company is now ready to extend its services in the FinTech sector by providing solutions for Decentralized Finance Development.
Our experts help in creating Industry-specific Financial applications such as DeFi Protocols and DeFi Tokens. Also our expertise in the Smart contract Development make sure that all the existing vulnerabilities in straightened up to produce a seamless user experience.
We cover DeFi Development services for Lending and Borrowing, Insurance, Stable coins, Asset Tokenization, Asset Tokenization, Synthetic Assets Creation, DEX Trading, Asset Management and Derivative Protocols.
Before getting into the details of the services that we provide, let’s clear the air about DeFi and how it can change the financial system.
Decentralized Finance (DeFi) can be defined as an advancement in the traditional bank services because of the inclusion of Decentralized technologies called the Blockchain. DeFi can also be called as the Open Finance because of its inclusive format. Presently, it is to be noted that the DeFi community is trying to provide alternate solutions for every existing financial service. The major services that is focused include savings, checking accounts, loans, asset trading, insurance etc.
DeFi can be simple explained as the shift from the centralized Financial systems to peer to peer finance with Blockchain technology build on Ethereum Network. The Decentralized finance has emerged as an active sector in the Blockchain space with various use cases for individuals, developers and financial institutions. The existing traditional financial system involves tedious processes due to which there is a need for a New Financial system named DeFi- Decentralized Finance. It eliminates any intermediates involved in the financial processes.
The popularity of DeFi was born from the Decentralized Applications, also called as DApps are build on the top of existing blockchains, such as Bitcoins, EOS or Ethereum. They will execute smart contract that allows the users to have a complete control over their financial assets. Application of this feature is not restricted to saving of a individual, investments and payments but it covers cases such as lending, insurance, margin trading, predections market etc.,along with those arenas which is financial system has to offer.
The Tools of DeFi helps to connect the users around the world without any centralized point of authority. This helps to make the processes carried out in a DeFi system more efficient, safe and transparent which are the prime qualities that is deprived in any traditional Fintech solutions.
The world we live in is filled with quite few payments and transactions that are condition based. Those conditions include monthly payments, credit or a loan. Presently, the crypto space is still dependent on the banks up to a reasonable degree. This concludes that the financial system of the world are much centralized.
Think if the financial system is also built on Blockchain! And everything that already exists in centralized manner is offered in decentralized ecosystem with smart contracts? While there are many Blockchain networks that are found in Crypto ecosystem, it makes sense that DeFi is mostly found in Etheruem Blockchain that support smart contract. Definitely by the involvement of Decentralized Finance, the involvement of a central party will be avoided. But there are also other factors that’s to be considered. So, here are the list of Advantages of Involving Decentralized Finance.
Immutability- No changes can be done once a process is carried out
Highly programmable- Involves computerized codes
Ultra transparency- Involves open source permissionless blockchain network.
Decentralized process- Absence of involvement of any central entity.
Permissionless- Does not require KYC, Credit scores etc.
Borderless- Any one having access to internet can get involved in Decentralized Finance.
Security- Assets and all the DeFi platforms are unhackable.
No risk of Censorship- DeFi dosen’t have any risk of censorship as the transactions cannot be revoked and the services are unstoppable.
Increasing use case- The use cases of DeFi are increasing Day by Day.
Less counter party risk- Since there is no need for third party validation of truth, there will be less counterparty risk.
Programmable- Its inherently plug and play, that makes it easy and cheap to build the additional services , instruments and also innovate on the top of everyting.
Finally, it includes self custody and Interoperability.
As we know with the help of DeFi the user entities can manage their own digital assets in a decentralized manner, there are vast applications of DeFi at present. Here are the most popular DeFi use cases to help you catch up to the rapidly changing DeFi world.
Borrowing and Lending
In the DeFi system the peer to peer Borrowing and Lending is most widely used as it allows the users to take up loan without any applications review. In some of the DeFi DApps, the Smart contract itself acts as a lender and the interest will be calculated based on supply and demand.
Open lending platforms which are usually DApps, that allows the user to either lend the digital assets out to the other users in order to earn a certain interest or to borrow digital assets for the users by paying interest on top.
The borrowers will need to deposit collateral and have to maintain the collateral value threshold to protect the borrower.
The DeFi Finance will support people to own an asset without anyone else having custody. Like while buying a stock, the user will get the ownership of the stock but the bank holds the asset.
Another important benefit provided by the DeFi for the asset management sector is the fact that the people can keep their name anonymous completely with wide range of global accessibility.
The Ethereum based games has become more popular recently and the use of DeFi protocols directly in the Gaming DApps has made it more approachable. Eg- PoolTogether
This provides solution to the data privacy of personal information along with open access. User with the interent can access to the information from anywhere around the world.
The involvement of DeFi in the Insurance assist the users in buying coversage and protecting their holding. Insurance is practically used as an unfortunate or unforeseen event using traditional insurance brokers, there is now a DeFi platform that offers similar functionality like Nexus Mutual. It can be used against many other devastating events like market crash, hack, smart contract failure or anything else.
Unlike any other conventional methods, the traditional insurers are decentralized insurance where the pool of investors will have to share the risk among themselves in return for the insurance premimum.
The DeFi involves Decentralized predictive markets, insurance and on-chain that is fully automated. For Eg- Augur- a betting platform with prediction markets.
Stablecoins are the digital assets that holds certain value pegged to another asset in order to reduce volatility and to make the price more stable as possible. These can be pegged to fiat currencies such as US Dollar or Euro.
The Stablecoins has now found a significant place in the DeFi system for lending, borrowing, remittance payments and also for institutional applications like Central Bank Digital Currency. It was initially developed to decrease the price volatility of Cryptocurrency and to make blockchain a user safe payment method.
These are the crypto assets that offers exposure to other assets like gold, cryptos and fiats. These synthetic assets are collateralized by tokens which are locked into Ethereum based smart contracts which comprise of built in agreements and incentives. Eg- Synthetix
Synthetic asset issuance said to be a complex form of DeFi use case. Its like a process of creating a digital asset token that mimics the properties of something else which is similar to how a stablecoin is pegged to fiat currency. The synthetic assets can represent precious metals, commodities, digital assets and many other financial instruments such as stocks and derivatives.
Decentralized Exchange or the DEX is a digital asset trading platform that operates without a central authority. They take up the form of automatic market makers (AMMs) like Uniswap or Curve that will use mathematics to set the price of tokens in a liquidity pool, or they might have a bid/ask system, where traders can set their own prices.
As we know that the Decentralized Exchanges involve peer to peer transactions of funds without a central authority. The Assets are not in the custody of exchange platform because of which the risks such as hacking, price manipulation and thefts are reduced. G- Uniswap, Liquality etc.
Tokens are assets issued on a blockchain network that proposes security and instant transfer of funds. These tokens are like fuel to the network, helps in reducing the transaction fees while using them and also unlocks various other economic possibilities.
Staking is one of the most popular DeFi uses cases and it’s the basic subject by which the DeFi world gets exposed to the world of investors. Its the process carried out to participate in the network governance of Proof of Stake (POS) blockchain, by the wallet or by delegating digital assets to a validator node or by holding the digital assets in a wallet.
By securing the blockchain by staking assets, you earn rewards that will automatically be delivered to the network. The most famous stackable assets include Tezos, Tron and Cardano.
Uniswap- Its one of the major DeFi Projects that’s in its fastest growth phase. It stores massive amount of Ethereum tokens. The DEX protocol Uniswap is is presently the most dominant trading platform. It has eclipsed other DEX contenders with over 71.9% of the aggregate dex trade volume globally. Also Uniswap has dominated over other DeFi economy by 18% with over $1.3 billion total-value locked at its heights.
FalconSwap- It’s a layer-2 scaling solution built on Uniswap. It is further extendable to aggregate other DeFi platforms also. This platform overcomes the drawbacks of Uniswap saw low Transaction speed, less privacy, high Transaction fees, Bad user Interface. It is also to be noted that, it has joined hands along with DEXTools to improvise the working process. FalconSwap solves the gas and slippage issue by following a method of aggregation of orders before sending them to underlying liquidity pools.
Compound Finance- Compound Finance is one of the project that shift the investor focus away from the Bitcoin due to the handsome investor earnings through Yield Farming. By lending out digital assets through Compound’s liquidity pool, investors instantly start earning continuous compound interest.
Furthermore, in the month of June the COMP token was listed on the Poloniex thus causing an increment in its valur from $55 to $385 (600% in returns). And soon the token was also listed on both Coinbase and Binance. The presence of COMP token in prominent exchanges has made the token more stronger.
Yearn Finance- Its an ecosystem of protocols that aims to simplify the user interaction with popular DeFi protocols and maximize the annual percentage yields of cryptocurrencies deposited into DeFi. It moves the user funds automatically between the DeFi lending protocols such as Compound, Aave, and Dydx to maximize APY.
Curve Finance- Just like Compound, Curve Finance rose to the prominence in the third quarter of 2020. The platform allows the users to trade between stablecoins with minimal slippage and low fees. Its liquidity pools are provided by Compound and Yearn Finance thus providing the necessary volume to allow for efficient swapping of assets on the curve.
Even though the DeFi is in Spotlight at present, there are still several factors that holds DeFi from its full stretch growth. One of the major problem is the Smart Contract Vulnerability. If a Smart contract is let into the ecosystem with a flaw in its code, it can lead to the loss of Funds. Another factor arises with the user error, since this cannot be predicted in anyway. Here is the list of other challenges faced in DeFi Ecosystem.
Availability of Fiat on/off ramps
Lack of Identity
Lack of Privacy
Smart contract vulnerability
Internal as well as External regulations
Here are the list of popular open-source DeFi protocols that are currently existing
For Lending purpose
Aave- Its an Open Source and Non-Custodial DeFi protocol to earn interest on deposits and borrow assets.
Compound- Its run on Ethereum Blockchain and it allows the users to lend and borrow the assets based on the collaterals.
Maker- Its a credit platform that supports DAI which is a stablecoin and is pegged to USD
For trading purpose
Uniswap- Uniswamp is a decentralized On chain protocol run on Ethereum network. It is designed for token exchanges on Ethereum which uses liquidity pools.
Tokenlon- It’s a decentralized exchange that supports off chain matching and on-chain settlement. (Here the on and off chain refers to Blockchain)
Augur- This is also a Decentralized Exchange along with Tokenlon that supports off-chain matching and on-chain settlement.
My crypto- Its an app that help the user to create, import and manage all the wallets.
My Ether Wallet- Its an easy to use open source interface that helps to interact with Ethereum platform.
DEXWallet-.Allows borrowing, lending, Exchange and Native in wallet Staking for users. It a DeFi mobile wallet.
The Decentralized Finance Applications or DeFi application aim to democratize and disintermediate financial systems through the introduction of Decentralized layer. Alongside its usage for payments, the other use case of DeFi applications include stablecoins.
Stablecoin- Stablecoin provide price stability character, that makes it suitable for monetary functions such as medium of exchange, unit of account and value added asset.
The stablecoins helps Global investors yield on their cryptoassets in the DeFi market by alleviating the potential adverse effects of market volatility. For example, If an investor invest in ETH to get interest from it, there is a possibility that the ETH price may drop and yield may reduce. But if the same investor in stablecoin such as USDC, the value underlying asset would be stable and the yield would remain unaffected by market volatility.
Nowadays investors look forward to yield more than traditional fixed interest investments like savings accounts, money market funds or bonds and can digitize their funds to earn above average yields in the DeFi market. One of the safest way to do that is the use of stablecoins that can be deposited into DeFi protocols.
Current Market and Future Market of DeFi
The Decentralized Finance market has grown into a multi billion dollar industry, with near to $6 billion locked up in DeFi protocols. According to a statement, the DeFi applications users has increased from 62,000 to 80,000 from the Q1 to Q2 of 2020.
Most popular DeFi Use Cases-
Lending and Borrowing
Digital asset Trading
The users of DeFi can also go beyond this by investing in baskets of digital assets, Trade digital assets on margin, digital asset exposure, insurance policy take out, bet on trustless prediction markets. Many factors influence the DeFi market to grow by upgrading new protocols that address the market needs and build an innovative new financial contracts.
The concept of DeFi is in the initial stage, but many existing DeFi protocols have proved to be promising. The Defi aims to provide a completely Decentralized Finance Environment without any involvement off third parties. Below the image depicts the comparison between the major Defi protocols with their locked money on monthly basis in million USD by the year 2020.
Source: Google photos
There is a prediction that the DeFi will be adopted widely by the Fintech companies, banks, government etc. There will be more demand The implementation of DeFi will make ensure the development of the effortless and open financial system.
The Decentralized Finance Solutions from the Defi Development company involves the development of DApps and smart contract that empowers the financial system with high transparency and security.
We, Pulsehyip provide Blockchain solutions for all types of industries. In addition to the various blockchain solutions that we provide, we also provide Decentralized Finance Solutions. We have extended our services in providing decentralized finance (DeFi ) solutions across all borders with complete consideration of the client requirements.
Our existing services include-
At present the DeFi Yield Farming has become a sensation. Its been noted that adoption of Yield farming is at its height these days. We at Pulsehyip, can help you create a system based on the concept of Yield Farming. Now let us get into the concept of Yield farming!
What is Yield Farming?
Yield Farming is a way to yield more returns for staking up cryptocurrencies or Digital assets. It’s a very new concept and it has risen from the Decentralized Finance sector. The actual idea is that the individuals can earn more tokens in crypto exchange for their usage of DeFi apps. This is called called as liquidity mining.
In simple terms, it refers to locking up cryptocurrencies and getting rewards. It can be paralleled with staking but there are many complexity in the background. In many cases it works with users called liquidity providers that helps to add funds to the pools.
Now you may ask, what’s liquidity pool? It’s a smart contract that contains funds. A LP will get rewarded in return for providing liquidity to the pool. The rewards will be generated by the fees generated by the DeFi platform, or some source.
Here are the list of DeFi Solutions that we provide in order to help you create your own DeFi system.
DeFi Lending Platform Development- We help you launch Lending platforms based on open source DeFi protocols to provide easy and fast lending of funds.
DeFi Borrowing Platform Development- We also provide DeFi borrowing platform development services which can help the users avail easy loans.
DeFi Smart contract Development- Our adroit Developer help in developing DeFi smart contracts free from the vulnerability along with high solidity and encryptions.
DeFi Smart Contract Auditing- In order to fix all the errors and bugs we provide seamless auditing services for your DeFi smart contracts.
DeFi DApp Development- As a DApp development company we have carried out extensive Dapp development services to our clients. Now, we extend it to DeFi based Development that provide more transparency and security
DeFi based DEX platform Development- We also provide services in building decentralized exchanges by utilizing open source DeFi protocols.
DeFi Wallet Development- We now create Cryptocurrency wallets. We create cryptocurrency wallets with high security open source DeFi protocols. This will let the users store the private keys that will guarantee the asset security.
DeFi Token Development- Our experts help in creating token to reach out your Defi project to many.
DeFi Stablecoin Development- We help you launch a stablecoin with more liquidity and stability.
DeFi for Insurance- We, Pulsehyip also provide smart contract DApps and a unique platform developed to carry out the insurance processes.
We Pulsehyip, have more than +4 experience in Blockchain Development and we remain the Best DApp development and service providers until now. We have 150+ top blockchain Developers who are very well acquainted with Blockchain Development. Utmost importance is given to the requirement of our clients. So, begin with the DeFi based business protocol sooner with our help.