news

bitcoin

1 X bitcoin bitcoin =

Tuesday

22 September 2020

The evolution of DeFi and its unique token distribution mechanics

The evolution of DeFi and its unique token distribution mechanics


smart summary beta

On the other hand, we also have layer zero solutions like Cosmos and Polkadot, which fall in pretty much the same category: They are visionary in the sense that they would allow the free flow of liquidity between networks and address congestion issues as well.

DeFi offers a unique solution: synthetic products that allow conservative investors to receive interest on their stablecoins and enable traders and crypto optimists to leverage their current positions.

Since it started distributing COMP tokens to its lenders and borrowers earlier this June, the platform has exploded, increasing its liquidity sixfold and becoming the largest DeFi application — only recently it was overtaken by Aave and Maker.

The governance token model has already proved to be beneficial for decentralization, as COMP holders have already had an impact on the protocol policies.

Then there is Balancer (BAL) where, even though BAL tokens have not yet been minted and distributed, and after some volatility due to price discovery early on, the BAL token increased from around $8 in mid-July to over $34 by the end of August.

These are projects and protocols that enable game-changing features, such as optimized automated yield farming (like Yearn.finance) or cross-blockchain operability (like Equilibrium), which allows for both tapping into a liquidity pool way larger than just Ethereum, while also solving congestion issues.

Yearn.finance is a case where, even though the developers have stated that the underlying governance token is mostly valueless, its value increased from around $700 to $15,000 in less than a month.

Equilibrium has an innovative value proposition, aiming to be the first true cross-platform DeFi solution (deployed on the Polkadot substrate), and thereby accessing much larger liquidity than any other DeFi solution out there.

The protocol follows industry best practices by offering its own governance token for liquidity farming and a full set of DeFi functionalities like stablecoins, derivative products, lending and liquidity pools.

The original projects have pioneered the approach and given us basic collateralized lending and the infrastructure including oracles and AMA, which are at the core of DeFi

Goto Full Article

bitcoin bitcoin price

$9106.76

24h

Live Average

bitcoin

News Article Sentiment

positive

Score (0.1)

Article Metadata

author

site

cointelegraph.com
Market data feeds provided by cryptocompare.com
bitsmart 2018