Decentralized finance: a sea change in the way you invest your money

The last few years have seen unprecedented transformations in the sectors that impact our lives the most! The COVID-19 pandemic has dragged global markets to an all-time low. Just when everyone thought the financial sector had already seen its fair share of digital upheaval, decentralized finance (DeFi) arrived. Let’s take a closer look at this inevitably growing trend in the financial industry.

What is DeFi and how does it work?

DeFi refers to a financial system that operates without a central authority or intermediaries. In the context of traditional finance – banks, brokerage firms and credit card companies – all function as intermediaries that control users’ access to financial services. But with DeFi, these services can be accessed directly through decentralized networks based on blockchain technology.

DeFi has the potential to reduce costly fees and improve accessibility. So how does it work? First, users can deposit their crypto assets in DeFi apps. These decentralized applications orDappsget out of “smart contractson the blockchain, where user deposits earn interest rates or engage in trading platforms. And companies are already starting to provide DeFi lending and borrowing services, insurance options, and even ways to manage investment portfolios, all on the blockchain.

What makes DeFi so popular?

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DeFi has the potential to reduce costly fees and improve accessibility.

Decentralized finance has been making waves in the crypto space. According to DeFi Pulse, Total Locked Volume (TVL) exploded from over $1 billion in July 2020 2021 to a high of $100 billion in November 2022 and eventually stabilized at over $30 billion in September 2022.

Another piece of data from IDC suggests that global blockchain spending has increased sevenfold over the past four years, from $1 billion in 2018 to over $6.6 billion in 2021.

The popularity is evident from the numbers and also from the fact that people are willing to invest in crypto. According to an analysis by Triple A, there are 46 million crypto owners in the United States (about 13.74% of the total population). India comes second with 27 million crypto owners (2% of the total population).

One might wonder what makes crypto grow by leaps and bounds. First, optimistic speculation about the growth of this sector has already attracted significant investment. But the availability of liquidity in the system is equally important.

The DeFi app for all things crypto

Subsequently, crypto assets caught the mainstream attention, with more and more people eager to get into the investment game. But it can be daunting for those without much technical knowledge to navigate the various online exchanges. It’s here thatCoinDCXone of the leading crypto investment platforms in India, comes into the picture. CoinDCX makes it easier than ever for smartphone users to invest in cryptocurrencies.

CoinDCX’s upcoming global wallet, Okto, allows users to start earning interest on their crypto holdings through decentralized finance (DeFi) instruments — much like mutual funds or fixed deposits in traditional finance.

https://twitter.com/Okto_app/status/1563150093062008832?t=4EO9wW57nuh6h1OCKU4kHg&s=35

Gaurav Arora, Senior Vice President of DeFi Initiatives at CoinDCX, said, “Our main goal is to make DeFi a breeze. Everyone, even my grandma, should be able to download the app and start their crypto journey. We envision Okto becoming an app for all things crypto and DeFi.”

For Indian users, Okto will be available directly on the CoinDCX platform. Users can transfer their crypto from their CoinDCX wallet to Okto and start earning. No more navigating confusing protocols or chains.

Final Thoughts

At its core, decentralized finance is about cutting out the middleman. This can bring significant benefits to investors. On the one hand, individuals have full control over their funds and assets. Additionally, having no central authority also means the ability to lower fees and increase access for users around the world. With DeFi, anyone with an internet connection has an equal chance to participate in global financial markets. Overall, the noncustodial nature of DeFi brings empowerment and democratization to the investor world.

Disclaimer: This article is a paid publication and has no journalistic/editorial involvement from Hindustan Times. Hindustan Times does not endorse/endorse the content of the article/advertisement and/or opinions expressed herein.

The reader is also advised that Crypto products and NFTs are unregulated and can be very risky. There may be no regulatory recourse for any loss arising from such transactions.

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