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Money market is a component of an economy that provides short-term funds. In the traditional financial system, money market instruments include treasury bills, bills of exchange, federal funds, and certificate of deposit. A money market is composed of highly liquid and short term assets. These markets provide liquidity for a financial system and are part of the greater system of financial markets.
Money markets have evolved in the modern world from unregulated to regulated. With the current system being mostly conducted by banks and relying on groups of intermediaries who act as brokers. Most countries with a domestic money market are part of the International Monetary Fund, which represents a pool of the foreign exchange reserves of more than 100 member countries.
Today, with the growth of the digital currency space, different money markets have been formed such as DeFi, which allows people to lend and borrow for short periods of time. The earliest DeFi apps to be created was MakerDAO, which was pioneered in 2015 and received $15 million investment allowing it to operate. These new money markets have decentralized systems that reduce the collateral for borrowers and allow lenders to have higher returns.
CeFi and DeFi Trading
Centralized Finance (CeFi) has been the standard for trading cryptocurrencies for a long period. In CeFi, all cryptocurrency trading is done through a central exchange which also runs and manages funds. Decentralized Finance (DeFi) involves the use of automated applications developed on top of blockchain platforms. These platforms create a fair and transparent financial system for anyone to be a part of.
Currently, both DeFi and CeFi deliver services such as lending, borrowing, crypto trading, derivatives trading, stablecoins, margin trading, and payments. They however have distinct differences.
For instance, DeFi platforms do not require AML or KYC information for users to access them. CeFi platforms are focused on adaptability instead of innovation, which is the case for DeFi, meaning that DeFi is technology-driven and keeps innovating rather than adapting to meet customer requirements. CeFi platforms have custody of a user’s funds and their private keys, which puts them at the risk of hacks and theft. These platforms also lack transparency, which is paramount in DeFi platforms, which are governed by smart contracts.
DeFi is a new and evolving space hence CeFi platforms are still the go-to for many services. This is also because they list a huge number of cryptocurrencies, especially top cryptos, which are not on DeFi platforms. However, the evolving DeFi space has created many innovative platforms that seek to bridge the gap and allow users the benefits of decentralized, permissionless, and transparent systems.
Why DeFi is the Future
DeFi aims to solve most of the issues users experience due to CeFi shortcomings. Centralized platforms collect a lot of user data and their systems are susceptible to hackers. For instance, as of Jan. 2020, more than $11 billion in funds was siphoned from centralized exchanges by hackers. The immutable nature of crypto means that these funds cannot be recovered.
DeFi is trying to solve such issues, by using smart contracts to allow users to interact with exchanges and other DeFi products. The DeFi platforms are noncustodial, hence funds are not held on them. Users can deposit and withdraw their funds at their leisure, using their wallets and private keys.
DeFi projects albeit very new in the market have experienced a lot of success and incredible growth. The total locked in DeFi according to DeFi Pulse is more than $44 billion. This massive growth is a testament to market reception of the innovation behind DeFi. Apart from this, they are available any day of the week, with a single platform having the capacity to serve a global audience with little downtime and tremendous scale.
How Kattana Helps Users Embrace DeFi
Kattana is a suite of reliable, professional, intuitive, and fast trading tools for both native and novice traders. It is the only professional trading terminal with scalable charts from decentralized and centralized exchanges. The platform is built to serve traders and allow them to trade within the platform, without finding contract addresses and other DEXs where assets are traded.
To adapt to the DeFi ecosystem, Kattana has created the best, simplest UI and UX as well as an aggregated cryptocurrency news site to provide users with exclusive and specific news about projects and assets they care about. With the rapidly growing DeFi market, this will filter out specific information tailored to each user, while keeping them in the loop about upcoming and promising assets in the space.
The platform will also calculate the P&L of all user transactions, generate a profitability chart, and structure all transactions as trade. This will analyze all ERC-20 addresses allowing users an easier trading time.
Kattana is focused on creating a platform for DeFi and its users to interact with these DeFi assets. With the daily changes, the Kattana solution allows users to be informed and in a position to be part of the ecosystem. Kattana can ensure its platform is highly secure and available at all times for users to trade and interact, without the worry of losing their assets.
The platform is now open to early adopters to test out their full suite of trading tools in the DeFi space. With this offer only available for a limited duration, time is of the essence. If interested in this amazing opportunity, you can sign up to join the whitelist on the Kattana website.
See you on the future side of DeFi trading!