What happens to cryptocurrencies worldfree4u.site

 What happens to cryptocurrencies worldfree4u.site

Cryptocurrencies have long been proclaimed the future of finance, but it wasn't until 2020 that they finally caught on to the old idea: making money with money. In the world of cryptocurrencies, decentralized finance (or DeFi) encompasses a wide range of blockchain-based applications designed to increase the income of cryptocurrency holders without relying on intermediaries - to generate the kind of passive profit that an investor can get from a savings account, treasury. bill or bond Apple Inc.

The idea seems to have caught fire, with DeFi app deposits surging from roughly $ 1 billion in June to just under $ 40 billion by the end of January 2021, suggesting that DeFi could become the mainstay of crypto from now on. In a tradition of disruptive innovation - as imagined by Clayton Christensen - DeFi could be the evolution of blockchain technology that could make it mainstream.

Profitable farming and currency trading

The search for passive profitability of cryptoassets, called growing crops, is already taking shape on a number of new lending platforms. Compound Labs has launched one of the largest lending platforms, DeFi, where users can now borrow and lend any cryptocurrency on a short-term basis at algorithmically determined rates. A crop prototype farmer moves assets across pools to Compound, constantly chasing the pool, offering the highest APY. In practice, this echoes the traditional finance strategy - the foreign exchange carry trade - where the trader seeks to borrow a currency with a lower interest rate and lend one that offers a higher return.

Automated market makers and electronic exchanges

Electronic exchanges like those used on the NYSE or NASDAQ are prime candidates to be at the forefront of this de-brokering. Markets function correctly because there are mechanisms for setting prices. While the NYSE and NASDAQ use order books (electronic lists of buy and sell orders) to do this, automated market makers (AMM) - one of the main building blocks of DeFi - rely on algorithms to determine prices based on supply and demand in real life. time. every crypto asset on the market.

Wider audience

After near-zero interest rates in nearly all major economies, DeFi has made crypto an attractive choice for profit-seeking capital. Even institutions that have limited risk tolerance and prioritize passive income over capital gains, such as university endowments and institutional investors, are beginning to show interest. Goldman Sachs, JPMorgan and Citi are considering entering the cryptocurrency storage market following the OCC's decision on the matter. Visa is working with digital asset bank Anchorage to allow bank customers to buy bitcoin. In addition, traditionally risk averse institutions such as MassMutual and the California Government Employees' Retirement System (CalPERS) are eager to gain access to cryptocurrency.