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 The Evolution of DeFi And Potential Impact on the Global Financial System

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Evolution of DeFi

 The Evolution of DeFi And Potential Impact on the Global Financial System

The evolution of DeFi in decentralization offers scalability, interoperability, and access to networks beyond Ethereum. Evolution in the blockchain industry moves in waves, the same with most technical domains. The building of layer-one solutions and infrastructures like Bitcoin and Ethereum was the first wave. The second wave came with the Initial Coin Offering (ICO) boom. 

Evolution of DeFi

As the ICO boom draws to an end, industry experts have been speculating on the next wave in the crypto industry. Most predicted that security token offering and initial exchange offering would be the wave. Their predictions never saw the light of day. Others believed layer-two scaling solutions like the Lightning Network and Plasma would be the bang. However, these layer-two solutions have proven to be essential solutions due to high network congestion and Ethereum gas fees skyrocketing. These solutions are unfortunately, far from their desired function. 

Also read: Proof-of-Work VS Proof-of-Stake: The best for scaling blockchains 

Other solutions like Cosmos and Polkadot are also within the same category as the solutions listed above. However, they are great in the sense that they permit the free flow of liquidity between networks. They also help to address the issues of congestion. 

This brings us to the evolution of DeFi or decentralized finance. It came at the right time to cove for the total disappointment of ICO. More than 70% of the ICOs were scams, while most of the remaining projects failed to provide good substation value. Before we go further to explore the evolution of decentralized finance, let’s know what DeFi is.

What is Decentralized Finance (DeFi)?

DeFi is a variety of financial applications in the blockchain industry geared towards disrupting traditional financial intermediaries. Decentralized finance (DeFi) is unique because it expands blockchain from simple value transfer to more complex financial use cases. DeFi does not rely on central financial intermediaries like brokerages, exchanges, or banks. It utilizes blockchain technology and smart contract to execute its transactions. 

You may be asking why we need decentralized finance when we have cryptocurrency. Well, cryptocurrency still depends on centralized exchanges for their use, while DeFi adopts decentralized exchanges to eliminate centralized point-of-failure. DeFi’s unique solution offers synthetic products that allow conservative investors to receive interest on their stablecoins. It also enables traders and crypto enthusiasts to leverage their current position. 

Also read: Investing in DeFi: Why you should rely on diversification and not short-term returns

One of the many signs of the brilliance of decentralized finance is the issuance of governance tokens. These tokens democratize the governance of the network while also promoting true decentralization. This feature has made the evolution of DeFi, the purest decentralized organization at the moment. 

The Power of Decentralized Finance 

There is no doubt that DeFi is changing the financial services world through its applications’ composable infrastructure. Its functionality and consumer benefits are also essential to how DeFi is augmenting the global financial system. The DeFi project is tackling long-standing issues and solving the inefficiencies in our current financial system. It improves financial inclusion, reduces cost, and increases liquidity. 

Outside finance, there has been a growing interest in DeFi and its potential to improve existing systems. In the DeFi space, there is what we call “Composability” or “Money Legos.” It refers to how you can connect the ecosystem’s components to form new and more powerful and useful applications. A component of the DeFi ecosystem may allow you to deposit funds and accrue interest, while a second allows you to direct that interest to a non-profit of your choosing. 

Another great advantage of the evolution of Defi is financial inclusion. Most people don’t consider accessibility to traditional financial services as a problem. However, the Global Findex Database revealed that about 1.7 billion people lack access to basic financial services. DeFi democratizes banking services. The current traditional financial system makes it prohibitively expensive to send money across borders. Without expensive intermediaries, decentralized finance (DeFi) unlocks for reduced costs and better interest rates for across border transactions. 

Evolution of DeFi Gives People Greater Financial Control 

The solutions of DeFi are giving users greater financial control over their finances. DeFi protocols and applications enable greater transparency and openness, lowering the costs and barriers to entry. With the evolution of DeFi, we can expect further devolution of power to financial service consumers. This approach will undoubtedly facilitate greater autonomy and flexibility.   

There are varieties of DeFi savings apps, offering users a way to save their money and receive interests outside of traditional institutions. Financial banking services and peer-to-peer lending are some of the many applications that give users greater financial control. With the availability of instant cash settlement, the ability to use digital assets as collateral, and no credit check, DeFi platforms certainly have a lot of appeal over traditional financial systems. 

One other segment of DeFi applications is decentralized exchanges (DEXes). With DEXes, you can trade digital assets without needing an exchange to hold your funds. The smart contract enables direct trades between the participants’ wallets. Users may also enjoy lower trading fees on DEXes, unlike centralized exchanges considering their reduced overhead. 

The Security Challenges of DeFi

 It is obvious that the evolution of DeFi has come with promising potential, but security challenges remain. Over the last few months, hackers have made away with at least $27 million from DeFi projects. In June this year, Balancer, a DeFi liquidity provider, experienced a sophisticated hack. The hacker tricked the protocol into releasing its tokens worth about $500 000. In another security breach, hackers stole $25 million worth of Bitcoin and Ethereum from dForce’s lending protocol (Lend.Me) through a re-entry attack. 

Read: What is Lightning Network and how does it work

Conclusion 

The evolution of DeFi and its integration into traditional financial services can drive innovation globally. DeFi’s potential to change the global financial system is undeniable, but tackling its security challenges is critical for continued expansion. The introduction of smart contract insurance is beginning to play a major role in the DeFi sector. Using insurance to reduce risks for users will make both developers and DeFi users to feel more secure and confident. The use of stablecoins is likely to continue growing. Hence, helping to drive mainstream adoption and also changing the way we engage in a transaction. As DeFi creates a better and more accessible financial system, the services controlled by banks and financial systems will start shifting. Although every new technology comes with its challenges, it will be exciting to see the creative and innovative ways we can use DeFi to improve the global financial system.  

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Top 10 Blockchain Startups in Nigeria 2020

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Over the years, modern technology has been dominated by companies based in first world countries. However, technological resources shouldn’t be located exclusively to a minute part of the world. In reality, the possibility of technology invading every sphere of human endeavor with its potentials can only be achieved when tech resources are distributed globally, as well as their use in helping local populations who are already showing a degree of commitment to improving their developing communities. More so is the advantage of knowing which of the crypto companies to invest in and how. With this list of the top 10 Blockchain Startups in Nigeria 2020, you can never be wrong in your choices!

In Nigeria, Africa’s largest economy, a number of blockchain startups are growing to meet the need for a cryptocurrency-thirsty populace. This is regardless of the fact that cryptocurrencies are not yet accepted legal tender in the West African country. Between April and June this year (2020) alone, $34.4 m was transacted in Bitcoin in Nigeria, the largest share on the continent. As stated by Usefultulips, South Africa followed behind with $15.2 m; Kenya with $7.8 m; Ghana, $ 640,000 and Tanzania $600,000.

It should not be alarming, therefore, that useful platforms through which cryptocurrencies are traded are springing up in handful places around the country.

Of all these platforms, I bring to you those that I consider the top 10 of Blockchain startups in Nigeria. See them below:

Top 10 Blockchain Startups in Nigeria 2020

(1) Quidax

Co-founded in 2016 by Uzo Awilli and Buchi Okoro, Quidax allows its users to freely purchase as well as sell cryptos in their local currency. Trading in Ethereum, Ripple, Bitcoin, Litecoin alongside other cyptocurrencies can be easily done on Quidax.

(2) BuyCoins

Provided by Bitkoin Africa, BuyCoins was founded in 2017 by Timi Ajiboye, Tomiwa Lasebikan and Ire Aderinokun. BuyCoins has a funding of $120,000. Users on BuyCoins have the opportunity to buy and sell cyrptocurrencies within a very short range of time.

BuyCoins conduct their services via their app, taking off prospective traders the stress of seeking other traders in the crptocurrency market. BuyCoin supports Bitcoin Cash, Litecoin, Bitcoin and Ethereum. Cryptos can be traded via their app which is available for IOS and Android devices.

(3) Bundle

Bundle is provided by and backed by Binance and was founded by Yele Bademosi. With Bundle, users can sell or buy Ethereum, Bitcoin and BNB. They also offer their customers the opportunity to buy cryptocurrencies using bank or card transfer. Proceeds from sales of cryptos, could also be withdrawn and deposited into your commercial bank account. With just N500, you can trade in BNB or Bitcoin.

(4) Yellowcard

Yellowcard provides users services for purchasing cryptos via the internet through debit cards or bank transfer. With this, they (users) can load their back accounts in the local currency, before paying for the digital coins they’re interested in. Currently, Yellowcard is in support of dash and Bitcoin core and would be adding tether (USDT) and Bitcoin cash (BCH) in the days ahead. Yellowcard is founded by Chris Maurice

(5) Patricia

With a dynamic operating mode, Patricia makes trading in cryptos like Ethereum, discounted gift cards, Bitcoin, Perfect money, etc. easily available to prospects.

(6) ABiT Network

Founded by Gauis Chibueze (aka Bitcoin Chief), ABiT Network provides blockchain e-commerce services throughout Africa. Some of ABiT’s products include ABiT Play, ABiT Go, ABiT Farm, ABiT Reps, ABiTCrowd, ABiTrader, and Tatcoin. For instance, with ABiT Reps, ABiT offers youths the opportunity to earn by telling others about ABiT products. Their apps can be found on different online stores such as Android and IOS.

Top 10 Blockchain Startups in Nigeria 2020

(7) CryptoTvPlus

CryptoTvPlus is one of the leading media agency on the continent. They provide the latest info on events, updates, project reviews in the digital currency market. They have an active online presence on Facebook, Twitter and YouTube with an application for easy access on Google play store. Founded in 2018, Cryptotvplus has a revenue of $ 15.40 million.

(8) Bitfxt

Bitfxt is another Nigerian cryptocurrency startup. Recently, in February 2020, they secured N5.45 billion from UK-based Payitup clearinghouse Ltd in a bid to expand their cytocurrency infrastructure. Traditionally, Bitfxt deals in Bitcoin and allows trade from prospects all around the globe.

(9) Roqqu

Founded by Uchenna Nnodim, Roqqu provides a speedy platform for the buying and/or selling of cryptocurrencies. Within thirty minutes, withdrawals are completed using Roqqu. They support EOS, STEEM, Ethereum and Bitcoin transactions. Like other cryptocurrency trading platforms, Roqqu has an app on Google Play store for easy trading. Traders on Roqqu are referred to as Roqquians.

(10) NairaEx

Founded in 2015, NairaEx has recorded over hundred thousand users with over one million transactions. They are one of the most popular in the digital currency market on the continent. NairaEx is a top blockchain company in Nigeria where cryptocurrencies such as Litecoin, Bitcoin Cash, Ethereum, and Bitcoin are traded. They are a reliable company for the exchange of Bitcoin and other cyptos through common payment platforms. NairaEx allows users to fund and withdraw within the same day.

11.Conclusion

The majority of the blockchain companies mentioned and discussed in this piece and others not mentioned here are founded and spearheaded by young Nigerians. These are highly spirited individuals who are seeking novel solutions to ancient problems in their immediate environment.

Ranging from agriculture, to the energy sectors and the financial payments service industries, these startups are making life better for many. You should find a way and align with the current trend. There is something for you if you invest in cryptocurrency today.

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