Millions of eth and more than one thousand bitcoins are now locked in what has been dubbed Decentralized Finance (DeFi).
This DeFi-iance can be described as native financial services that operate in a trustless manner on the ethereum or bitcoin blockchain through a largely autonomous and self-operating code based system that can’t be tampered with in usual circumstances (ignoring hacks and so on).
It’s a very new and fast evolving area that was established only last year with it proving to be quite popular because it can provide certain useful services.
The Lightning Network is the most prominent example for bitcoiners. That has now some $9.7 million worth of bitcoin locked in it, doubling from April when we last looked.
Since then, quite a lot seems to have changed, so we’ll go through much of it as provided by the DeFi Pulse.
Maker’s dai dominates, not least because they invented this whole genre.
About half of all crypto assets are locked there, with InstaDApp being a newcomer that operates sort of on top of Maker Dai.
InstaDApp allows you to draw Dai, buy ETH, and lock that ETH with a single transaction. So margins on steroids. $25 million worth of them, although because of collateral, divided by 3 presumably.
Compound you probably all know, growing very well it looks like, but a new comer, Synthetix, seems a bit interesting.
We’ve previously covered something like Synthetix, tokenizing Apple stocks, that sort of thing, but here they’ve started tokenizing cryptos first, as well as gold and silver and fiat.
This apparently launched just in March and already has not far off from $20 million worth of crypto locked-in presumably mainly for the longs and shorts.
Dharma has risen from $1 million in April to now $13 million even though they paused new services as far as we are aware, with dYdX (long and short) at $11 million from off the map in April, merely three months ago.
Close to some $7 million bitcoin has been WBTC tokenized on eth, up from just half a million in April.
Then there’s Nexus Mutual. Now we haven’t had time to look at this one, so we’ll have to leave you at the mercy of their jargon, but it’s maybe what can be described as Augur, but for insurance, except here they have KYC due to “compliance purposes.”
Melon is apparently not getting much love, but they’re a fairly interesting project that sort of allows others to manage your crypto – buy and sell and so on – while those others don’t quite have possession of it or can’t quite diverge from the rules.
It’s a sort of decentralized asset manager where anyone can set up a fund and you can just give your eth to whichever fund for them to then try and hopefully grow it.
Veil is getting even less love. That’s a sort of interface for Augur, which too is seemingly not quite breaking through.
Then there’s Connext. We haven’t had time to look at this either, but it seems to be some sort of payment channel running on ethereum where users set-up Dai Cards and can pay other Dai Cards, as well as receive from them, as much as they want.
It looks like this payment aspect isn’t really attracting much attention, with xDai too at just $30k, presumably because you can just pay with dollars.
What can be called investment or trading services however, perhaps with the exception of Melon, seem to be attracting quite a lot of attention because there’s some sort of magic to it.
You know with dai there’s a real service of unlocking illiquid eth value and so facilitating the use of that value while hodling.
It kind of makes eth a bit useful. Something centralized services can provide too, but here it’s just… you’re just dealing with the computer. You’re free sort of thing.
You’re free to lose it all too because all that margin upon margin can lead to no margin at all or no eth, but it’s a real innovation because it creates something (dai) kind of from nothing while still anchored to the base reality of locked eth.
Compound develops on that, hence why they’ve kind of become a force to be reckoned with, by allowing you to unlock value from any tokens (well, the ones they’ve incorporated so far).
In the process so allowing “static” hodled assets to actually get to work, with a lot more developable here as this area grows from 10 “services” to now nearly 20 in just three months.