5 DeFi Categories to Pay Attention to

The niche industry is even getting name-checked routinely now by billionaire Dallas Mavericks owner Mark Cuban.

 DeFi products use automated smart contract to run on decentalized networks such as Ethereum. These applications aim to provide financial services like issuing loans, swapping between assets, and providing interest bearing deposits without the use of a centralized coordinating authority.

In other words, it allows users to provide and receive bank-like services without actually needing a bank.

Removing centralized control is intended to lower costs for the end user and democratize access, making it impossible for well-heeled players to interfere with the market.

While the amount of ETH locked in DeFi protocols fell sharply last November, and then dipped again in early January—just as the price of ETH started really picking up and users likely pulled their ETH out to chase profits.

Here are 5 DeFi Categories to Pay Attention to 

• Derivatives are contracts whose value is linked to an underlying asset. It allow parties to agree upon a purchase price of an asset at a particular time in the future.

In the DeFi space, cryptocurrency holders can use derivatives to track certain values such as Total Value Locked (TVL), price inflation, or even gas fees.

• Insurance.

The DeFi space is also insurable. Cover Protocol is probably the most famous insurance provider for platforms. It allows users to invest in insurance policies through staking.

• Staking: DeFi platforms now allow users to borrow to stake. This is a way to maximize income for liquidity providers who provide assets for a platform.
• Lending and Borrowing.

Majority of lending platforms require borrowers to offer other assets as collateral. The interest goes towards the upkeep of the platform and to the lenders in the form of returns. The process of staking, requires crypto holders to commit their assets to a platform for a period of time. These crypto-assets are then lent to borrowers, who pay interest.

This means, many crypto-assets have this option of staking on their platform.

• A decentralized exchange (DEX) is a type of cryptocurrency exchange that facilitates peer-to-peer transactions without the need for a central party.

projects have led the way in the current crypto cycle, with multiple assets earning investors significant returns.

Excitingly, we have started to see the foundation of a new financial system taking new shape. 

Today, DeFi is the preserve of a small subject of crypto-native users and assets and is seen by its critics as a wild west. Will this change?