The term DeFi (decentralized finance) refers to the conversion of traditional financial services into blockchain-based alternatives. The DeFi market eliminates the middleman and shares profits with regular users. As such, it’s a great place for crypto users to generate wealth.
DeFi Expands
The DeFi sector encompasses a lot of technologies nowadays. It includes protocols such as DEXs (decentralized exchanges). One of the first DeFi projects to take flight was the Uniswap DEX. Uniswap changed the game using a decentralized technical structure. For example, it was the first network to provide the ability to launch a token via pools.
This approach enabled projects to access global funding securely. It also helped to drive innovation in the DeFi sector forward. Today, Uniswap is the largest DEX in the world and has added more features and services. It has also inspired a ton of alternatives in the market such as the META DEX. Each has its features and benefits that improve on previous shortcomings.
DeFi Stats
A recent report by Block highlighted the growth the DeFi sector has experienced over the last year. The study found that +$4.5 billion in revenue was generated via DeFi protocols as of March 2022. DeFi is a popular option for so many reasons. Here are just a few ways it can help you better your financial strategy.
NFTs
NFTs (non-fungible tokens) are a hot topic in the DeFi sector. These cryptocurrencies differ from others in that they can represent a single item. NFTs have found extensive use in the art and gaming sectors. Artists have embraced technology because it provides them with more transparency and trackability. There are even NFT marketplaces that can be set up to pay artists commissions every time their token trades.
NFTs are great for many reasons. Primarily, they help to bring off-chain items onto the blockchain. For example, you could have an NFT that represents your car title, or a particular in-game asset. Because these items are now on the blockchain, they enjoy more security. They can be verified using a blockchain explorer.
GameFi
GameFi is the combination of gaming and finance. It’s a subsection of the Play to earn sector. These games enable users to secure profits by participating in titles. One way in which the GameFI sector continues to expand is within the metaverse. The Metaverse is a 3D virtual world that users can create 3D worlds within.
Metaverse technology brings a lot of interesting factors to the market. For example, imagine that you wake up in the morning, and instead of getting ready for your daily commute, you simply dawn a headset and enter the office virtually. Metaverse GameFi protocols enable users to create assets and then leverage them to create passive rewards.
Traditional Finance is Inefficient and Closed
The traditional financial systems of the world are sorely outdated. They rely on decades-old technology in some cases. As such, the centralized financial sector is filled with inefficiencies. DeFi removes these inefficiencies and unneeded personnel and replaces them with smart contracts. These autonomous protocols can execute actions when certain criteria are met. This removes human error from the equation which helps improve user security further.
Centralization Harms Users
Centralization is a major risk to users. Whenever you have centralization in the financial sector, you have corruption and a skewing of the odds against the average user. For example, your local bank pays out only 0.03% of your savings account holdings. This rate is far less than the current rate of inflation. As such, savers are losing money holding their funds in these accounts.
DeFi banking features provide more transparency and rewards. For example, the META BANK offers 10% APY on your holdings. In addition to these high yields, you can also stake your tokens to secure even more profits. Your rewards get paid in META 1 coins which enables you to strengthen your position every payout to improve your future ROIs. In the end, users can leave their funds to grow over time securely.
Traditional Finance is Expensive
It’s expensive to send fiat currency globally. Sadly, the average cost of sending money internationally is 7%. With billions getting sent daily, this is a lot of funding lost for unnecessary reasons. These losses occur due to the compartmentalized and technical nature of fiat currency.
The current layout requires +36 third-party verification systems to approve your transaction before its sent. This process adds a lot of delays and fees to the equation as each group has some cost associated with its actions.
For example, let’s say you sent money to your mother in India. You would pay a fee for the sending party, the bank, the regulators, verifications systems, security, etc. All of these fees are heightened when discussing large amounts of funding. It can take weeks to send +$1 million globally depending on the destination and origin of the funds. A person can send millions in cryptocurrency much cheaper than sending even a thousand dollars in fiat.
DeFi is Cost Efficient
The technical nature of blockchain networks means that there’s no need for third parties. These systems can conduct direct peer-to-peer transactions. The use of smart contracts eliminates the need for additional regulatory processes or accounting requirements as well.
Gatekeepers
A large population of people lacks access to basic financial services. These people have been shut out of vital options due to their location, war, refugee status, lack of documentation, credit history, and other scenarios. For these people, protocols like META 1 provide essential open access to wealth generation features.
DeFi networks are extremely open and private. Rarely do DeFi protocols require you to enter in your personal information In most scenarios, to utilize DeFi services, you simply need to connect your network wallet. This open approach falls in line with DeFi’s goal to create a fairer financial system that is community-led.
DeFi Features Rock
DeFi protocols offer features that are designed to help you build up your savings without taking losses. As such, these networks provide a variety of staking, farming, and lending options to users. These systems enable you to secure returns by providing liquidity to a smart contract on the network.
Stakers earn returns based on the APY and the amount of time and tokens they stake. Farmers earn rewards similarly. However, they need to monitor their pools because farming protocols have varying APYs. Best of all, both of these options enable you secure returns without giving up ownership of your crypto.
Safehaven Assets Change the Game
One of the biggest advantages of DeFI is the introduction of safehaven assets. These advanced digital tokens leverage the benefits of blockchain technology, stablecoins, and more. Safehaven assets derive value from another asset as part of its stabilizing protocol.
This structure decouples the token from the volatility of regular cryptocurrencies. There are a lot of different ways today stablecoins retain their value. Most projects are fiat-based. This structure means that they hold fiat reserves along with other paper assets to back up the tokens issued.
Fait Backed Projects were Just the Start
This approach is the most popular with projects like Tether becoming top-performing coins. There are some downsides to this approach worth mentioning. For one, the user must have all their trust in the firm that the fiat reserves are what they state. Additionally, these projects are subject to the same inflation and bad monetary policy as fiat currency. Since fiat pegged coins derive value from fiat currency, they can’t escape inflation like other types of stablecoins.
Gold-Backed Coins
Another alternative to fiat stablecoins is gold-backed projects. These tokens operate in the same manner but rather than deriving value from an inflationary asset, they leverage to gold, the world’s oldest source of value. Gold-backed tokens enable users to escape inflation. Notably, gold has been known to increase in demand as market volatility rises.
While this type of stablecoin is better than fiat versions, it still has some serious concerns that needed to be addressed. The primary issue is how to keep the token pegged to its asset value. There are plenty of instances in crypto history where a stable coin began to sell for less than its asset value.
When you examine these issues they usually result in a major loss in value for the project and its underlying asset. One can look at the Luna/UST crash as a perfect expmple of how a lost peg can result in major losses in less than 24 hours. It’s these reasons why safehaven assets emerged in the market.
Safehaven assets combine the best aspects of stablecoins with advanced protections. These tokens use smart contracts to prevent volatility, retain value, and prevent centralization. As such Safehavne tokens are now a popular option for all traders to consider. Among the safehaven tokens, the most notable project is the META 1 Coin.
META 1 Coin
The META 1 Coin is unlike its predecessor. It derives value from a basket of gold-related assets rather than straight gold. This approach helps to buffer against fluctuations in the price of gold. This strategy enables users to still enjoy the appreciation and store of value characteristics of gold as well.
Asset Value Protection
META 1’s development team spent years researching how to protect the token from sudden volatility. Their efforts resulted in int eh creation of the asset value protection system. This protocol leverages a powerful off-chain sensor called an oracle to monitor the market for META 1 Coin trades.
The system will cross reference these trades against the base asset value of the token at the time. If the trade doesn’t meet the minimum requirements, it’s declined by the system. there are multiple reasons why this system makes sense.
For one, it prevents pump and dump schemes where traders come in and buy up a bunch of tokens to drive value and then suddenly dump their bags and tank the value. META 1 Coin users know the project won’t trade for under its asset value making it far more secure than previous tokens.
Whale Prevention
Preventing pumps and dumps and other harmful trading strategies is just the tip of the iceberg for the project. There are also whale prevention mechanisms in place to further protect the ecosystem from unwanted influence. Whales are a serious problem for many networks.
Whales are often professional traders who are leveraging other people funding. They can hold incredible sway in the community with some networks having whales that hold over 5% of their circulating supply. The main drawback to this scenario is that the whale can exert a lot of influence on the project. They can completely wreck the value by selling all their tokens at market value without warning.
META 1 has a system that requires users to prove there are individuals and that they are not trading on behalf of a corporation or trading firm. These groups are blocked from joining the METANOMICs ecosystem. Even governments can infiltrate the network thanks to their power tool.
Token Limit
A $5 million token limit is another way the development limits the influence of individual traders on the platform. META 1 is among the first project sot create a token limit. It demonstrates their commitment to stability and keeping the platform decentralized moving forward.
Enhanced Earning
The METANOMICs DeFI ecosystem is a vast array of low-risk passive income features and much more. Users can secure easy returns by opening a META VAULT high yield savings account. These smart contracts operate like your bank account. You simply deposit your funds and your returns start accruing. The META VAULT pays out 10% APY which is far more than your fiat bank account offers.
The DeFi Movement is Going Mainstream
The cat is out of the bag in terms of DeFi’s ability to help users earn. The DeFi market is already in the billions with analysts predicting continued growth in the coming years as more ecosystems and features go live. For now, you can leverage DeFi protocols like META 1 to build wealth and keep your savings secure.