Over the last year, the decentralized finance space has been making waves in the financial sector, building on blockchain technology to decentralize a multitude of banking services. The adoption of DeFi services has been steadily on the rise, and all kinds of assets are making their way onto the blockchain.
With nonfungible tokens popularizing digital art ownership representations, blockchain technology is creeping into the most unexpected places, and DeFi is fuelling its expansion. These unique and sometimes quite valuable tokens are especially relevant today, with art galleries closed due to restrictions pertaining to the global pandemic and cultural experiences now taking place online more than ever before.
During 2020, DeFi saw an explosion in the kinds of ways liquidity can be generated, with marketplaces for financial products, community-based social and governance tokens, and unique art pieces. Today, a significant amount of Bitcoin (BTC) is used as a store of value, but that isn’t what it was created for. Slow transaction times, high fees and a history of rising value hinder Bitcoin’s use as a payments system, but that hasn’t stopped the blockchain industry from creating others.
The advent of programmable smart contracts catalyzed the formation of our modern decentralized finance ecosystem, making financial services accessible to anyone with an internet connection. The expensive overheads of centralized banks have made international transfers slow and uneconomical for most use cases. However, by implementing a set of interweaving protocols, decentralized finance delivers alternative ways of distributing value to different communities across the world.
The traditional financial system works for most, but it could be doing a lot better. While blockchain isn’t quite ready to take the mantle from it, today’s decentralized networks have big ambitions, and as access to digital assets continues to improve, people around the world are increasingly engaging…