Today we’re going to talk about How To Create & Use Decentralized Finance Products?
Those who can write smart contracts can create Decentralized Finance applications. InstaDApp, which is a Decentralized Finance asset management platform, built a Decentralized Finance product by developing a a better Ul on the existing Decentralized Finance products. InstaDApp was able to create a spike in other De- centralized Finance products by making Decentralized Finance access more user friendly and simplified. Hence, they were successful in raising $2.4 million in funds without the need for any permission.
Any individual can use the Decentralized Finance products by visiting the application’s website and connecting a Meta Mask wallet or some similar wallet. The users need not provide any personal information or register in most of the Decentralized Finance DApps. But they should provide their ETH address to process transactions through the Ethereum network.
Maker Dao’s Oasis app and compound allow the users to take a loan or earn interest on the stable coins invested. Users can exchange tokens and crypto assets without the need for registration or any sign- ups on Uniswap and cyber, which are Decentralized Finance products The Set protocol allows users to buy tokens to initiate automated trading.
Decentralized Finance Products
Decentralized Finance is a new technology that came into existence in 2019. Although it is the latest technology, Decentralized Finance has tons of products out there. Let’s understand them one by one.
MakerDAO: MakerDAO is a stable coin project pegged to the US dollar and backed by crypto. The Decentralized Autonomous Organizations (DAO) maintain the Maker protocol and its lending of DAI stable coin. MakerDAO ensures that the DAI stable coin retains its value at $1. The MKR token holders vote on how much collateral should be held in each Maker CDP software. The token holder’s votes and the collateralization ratio are noted in the blockchain, where the collateralization rule is carried out automatically.
Aave (LEND): Aave is a Decentralized Finance lending protocol where users can borrow and lend cryptocurrencies for stable and varying interest rates. Lend is a native token of Aave which offers the traders some discounted fees. It uses Nexus Mutual to protect users against smart contract risks. It offers the most diverse range of Decentralized Finance collateral of any lending protocol in the market. Aave supports nearly 20 Ethereum based assets.
Compound: Compound is a popular Decentralized Finance lending and borrowing platform which allows any individual to lend & borrow unless they have relevant crypto assets to lend or use as collateral. Once the individual decides to lend or borrow, their request is matched. automatically with the respective lenders & borrowers. They can adjust the interest rates depending on demand, supply, and open lending protocols.
Uniswap: Uniswap is a cryptocurrency exchange platform that allows any individual to engage in Decentralized Finance. This exchange platform runs on smart contracts and allows users to trade from their wallets. Users can become liquidity providers to supply crypto to Uniswap in return for a small fee. This platform uses Automated Market Making to settle trades near market price automatically.
Augur: Augur is a prediction market platform where an individual is rewarded for correct predictions. The users can vote on the outcome of events by giving a certain value to the vote. In this product, users can buy and sell shares in the outcome of an event. For example, the difference for
Bitcoin to hit $10.00 within a month, which means a share on either side costs$0.50 which accounts for a total of $1. Hence if the user predicts right, then he will receive $1 in return. The whole concept of Augur is based on crowd wisdom.
dYdx: dydX depends on the liquidity pool with rates. They do not participate in p2p loans as there is no guarantee about liquidity. This platform focuses more on the use-cases of margin trading. Users can open margin positions with a resistance of up to 4x The dydX smart contract holds the money sent by the trader into the contract and sells the deposit. If the trader wants to close the margin position, the smart contract will buy the lent amount. Hence, if the trade is successful, then the user will receive his deposited amount with some good profit..
Set Protocol: Set Protocol is a Decentralized Finance product where users can create a set of underlying assets. The users can also set management rules like how the basket should be rebalanced and when this should happen. Hence the users can create strategies in the smart contract. There are two categories of protocols which are:
Social trading in which humans can execute strategies
Hard-coded rules define the guidelines of how the contract should trade.
Opyn: Opyn is a Decentralized Finance product that offers insurance to its Decentralized Finance users. This platform allows users to be safe from both technical and financial risks like hacks, bank runs, or even administrative key compromises. If the user comes across any such risks, then he can claim for a payout to get back the deposited amount.
