DeFi News

Recent DeFi News

What Is DeFi?

DeFi is short for Decentralized Finance, which refers to a specific set of financial protocols powered by blockchain technology. In Decentralized Financial protocols, transactions are done on a peer to peer basis, without the need for a third party to oversee or govern any part of the process.

Decentralized Finance is implemented through the blockchain environment, and is therefore trustless and permissionless. This means there is no need to establish trust or be granted systemized permission in order to facilitate use. This makes Decentralized Finance publicly verifiable through the blockchain ledger which records all transactions, and is still anonymous with regards to the specific identity of the peers which interact thereon. This can differ in cases when the platform requires KYC and AML measures.

Volatility Has Surrounded Much Of The DeFi News Of 2022

Defi news has been greatly reflective of uncertainty, as record lows have riddled established decentralized currency ecosystems like BTC and ETH, the leaders among all Digital Assets. It is no secret that the DeFi space and cryptocurrency market capitalization have taken considerable hits throughout 2022.

The total cryptocurrency market capitalization dipped to hold just above $800 Billion at one point in June, after crossing over the $3 Trillion dollar mark just last year in November 2021. There have been many difficulties seen in crypto and other global financial markets, such as the stock market which is also estimated to be down as far as 50% or greater. However, there have also been many instances with evidence of strong recovery and growth in the future for crypto and the overall Decentralized Finance market segment.

The Downtrend Reveals Builders Will Build

Ecosystems like Ethereum, Cardano, Shiba Inu, Curve Finance and Bitcoin, the long-reigning industry-wide leader of all digital assets, have all charted recent development and expansion in their ecosystems, amidst low prices in the largely bearish market. July 2022 saw a pump return to the entire crypto combined market capitalization.

There has also been good news to report from exchanges and crypto financial platforms. Major cryptocurrency exchanges such as Binance and FTX have continued to demonstrate focus on development and growth, acquiring significantly larger market shares in spot trading during the extended downswing. Some others like Celsius and Voyager Capital have been affected adversely and forced to close their doors and declare bankruptcy.

AAVE Looking To Increase Confidence In Stablecoins

In other DeFi news, one Decentralized Finance protocol with a focus on growth appears to be the Ethereum mainnet DeFi platform, AAVE. The AAVE decentralized network is primarily used as a crypto lending and borrowing platform. AAVE reports a massive $6.3 billion in locked assets, all represented and held in automated Smart Contracts. At the beginning of August the borrowing and lending platform announced the passing of a resolution first mentioned on July 8. GHO, a newly developed overcollateralized stablecoin, will be introduced to AAVE platform users.

This is significant news in the DeFi space since in May the TerraLuna ecosystem saw over $40 billion, and more by some estimates, from its UST algorithmic stablecoin crash. The crash of UST created a void in the market of trustworthy stablecoins, and shook investors confidence in stablecoin security altogether.

The Significance Of Stablecoins

Stablecoins refer to digital currencies created to limit investors’ funds from exposure to the constant volatility of the crypto market by being pegged to fiat currencies. GHO will be overcollateralized by several different cryptocurrencies, and is therefore seen as a potential direct competitor to DAI, a stablecoin with a 130% overcollateralization with audited USD reserves.