Cryptocurrency companies and enthusiasts always throw unwarranted hype in any situation. Stock markets are healthy and cryptocurrencies are doing well. Either the stock market is falling or inflation is skyrocketing and cryptocurrencies are the only solution. We want you to believe that the hyped cryptocurrency and his DeFi will always be profitable. It’s as if the crypto winter and the failures of multiple exchanges and his DeFi implementations of the past few months never happened at all. When Bloomberg, Coindesk, CoinTelegraph, Fortune, and The Motley Fool all provide good arguments for why DeFi is in serious trouble, shouldn’t we declare DeFi the savior? Don’t get me wrong, I wrote about technical issues on these topics a few months ago here and here. Could it be due to TerraUSD (UST)’s 4-month $60 billion failure?
While there has been much discussion about Central Bank Digital Currencies (CBDCs), there are already deflationary stablecoins in the ecosystem whose value may be pegged to collateral such as other cryptocurrencies or traditional assets. If so, what is the real advantage of a CBDC?? The whole idea of stablecoins is to provide a crypto asset whose value is extremely stable. Most stablecoins achieve this stability by pegging their value to a fiat currency such as the US dollar or a basket of assets including fiat currencies and cryptocurrencies.
Additionally, most stablecoin projects incentivize people to continue investing in the ecosystem by offering derivative versions of the assets they lock into their liquidity pools, allowing investors to keep their primary assets locked. Allows you to participate in other DeFi protocols while still They can earn generous interest and still use derivatives to take out our loans or earn yields elsewhere, doubling their initial investment.
DeFi is providing new avenues for economic growth while empowering every individual, not just the ultra-rich. Rather than being pegged to a national currency, and instead with the broader development of an economy powered by cryptocurrencies, DeFi protocols will provide a generous amount of room for saving, earning, and borrowing, with little initial investment capital required. We can offer incentives.
Overview Tim SloaneVice President, Payments Innovation at Mercator Advisory Group