DeFi is the digital equivalent of Wall Street without the safety net.
High rewards are promised, which makes marketing a piece of cake. As an example, CHESS, a cryptocurrency, pledged a return of 300 percent per year. The only condition to that astronomical return is that the entire payment would be made in CHESS itself.
Phenomenal Growth Rate
Considering the fact that DeFi was hardly known till last year, its growth rate is phenomenal. Per CoinMarketCap, the sum of CAKE tokens release by the competitors of DeFi is around 10 billion dollars. Whereas DeFi holds more than seven billion dollars in just its market-making fund.
DeFi: Definitely a Rollercoaster
DeFi is exciting and involved with risk factors simultaneously. The main reason for this volatility is the smart contracts that automatically bounce crypto currencies according to the computer codes. This process is exploited by crypto traders to replicate Wall Street’s activities. Hence, in a way, they don’t require Wall Street at all.
Yield Farming Facilitation
Yield farming, also known as market-making, is one of the most fundamental instruments of the crypto business. The prime brokerage (provided by banks to hedge funds) has popped up again in the form of secured loans, courtesy of DeFi. It facilitates speculation business as traders can now target a token to short sell by using the leverage factor. People have also started to swap interest rates and cores by using debt to conciliate between cryptocurrencies, DeFi providers, and exchanges.
Till now, the sole way for a common investor to use the facilities of the market making, brokerage, structured credit, and leverage, provided by Wall Street was to purchase investment bank stocks. However, things are looking rosy now as an even structured credit has appeared in the crypto market.