DeFi has made significant progress towards being a blockchain-based tech offering a system of financial rails parallel to traditional financial infrastructure.
To scale up the digital innovation ecosystem and give new momentum to fintech, financial projects are figuring out how to integrate next-gen technology with finance. New technologies like 5G, cloud, big data, and AI are forging new paths in finance by leading humanity into a new era – from connecting individuals through connecting things to developing a fully connected, intelligent world. As the world enjoys these intelligent systems and smart homes, the finance sector is reaping from intelligent computing and automation capabilities through blockchain technology.
Blockchain birthed decentralized finance (DeFi), an emerging and exciting financial technology giving centralized finance a run for its money. DeFi is building the future of finance through a new and innovative financial infrastructure, stepping away from the existing financial one used by traditional finance (TradFi).
DeFi is on an upward trajectory, with new financial models coming up in this ecosystem each day. Thanks to DeFi, we have investment tools such as liquidity mining, staking, and DeFi Loans. Decentralized exchanges, among others. How is DeFi able to maintain this growth path?
DeFi is a blockchain-based technology spearheading foundational change in finance through the facilitation of entirely new financial products and services that reduce the reliance on legacy gatekeepers and TradFi industry stakeholders. Let us briefly explore DeFi’s transformative effect on finance today.
One of DeFi’s most common use is in protocol-specific money markets. Users can borrow, lend, and stake crypto assets by providing liquidity to a chosen protocol in different types of collectivized liquidity pools.
One issue in DeFi lending that most investors are wary of is the over-collateralization of digital assets. Over-collateralization raises the question, why don’t users receive the amount similar to what they provide as collateral? The answer to this is that protocols need to be kept safe so that they don’t become insolvent and because of this need for safety, the said protocols offer over-collateralized loans. Under-collateralized loans do, in fact, exist as an alternative. They ease burden for borrowers and allow lenders to get more for their provided liquidity due to higher utilization levels. Under-collateralization is preferred as it is more user-centric and offers better financial efficiency.
Currently on-chain under-collateralization too comes with a few trade-offs such as some implementations relying on trusting the borrowers leading to the protocols whitelisting only certain borrowers or even restricting the eligible set of both lenders and borrowers. Such a solution is not permissionless and to rid the lending ecosystem of this hurdle, Nolus goes a notch higher by:
A Decentralized exchange (DEX) is a peer-to-peer marketplace connecting crypto buyers and sellers that is non-custodial, i.e., a user remains in control of their private keys when transacting on a DEX platform. Since no central authority controls DEXs, the platforms deploy smart contracts that self-execute as per their set conditions and record each transaction to the blockchain.
In addition, we have standalone DeFi projects with novel technologies built within themselves that are changing the finance scene in their own right. One of these projects is the Nolus Protocol, bringing the world’s first DeFi Lease to decentralized finance.
As an upcoming Web3 financial suite, Nolus comes up with innovative money-market approaches with their unique lease solution to further revamp the DeFi space. They have an inclusive, intuitive, and easy-to-use solution to empower mainstream adoption of DeFi. The goal is to merge TradFi and DeFi using a holistic approach that leverages different financial tools and the advantages that decentralized finance brings to the table.
The protocol incorporates traditional lease financing into DeFi Leasing by bringing a solution that most people are used to – buy now, pay later. Without requiring users to be finance experts, they can secure a larger amount of a desired digital asset than their current equity balance without worrying about hard margin call formulas or complex lending fee structures.
Fiat on ramping is a proposed part of the Nolus DeFi lending mechanism, a work-in-progress really, where users can exchange fiat currencies for crypto. Upon launch, users would be able to take advantage of this DeFi Lease solution. When the fiat on-ramping comes to fruition on Nolus, users can transfer fiat or crypto from a bank account/debit/credit card/ crypto-enabled wallet, make a down payment in the amount desired, and approve the smart contract.
With the Nolus Defi Lease, users have the full freedom to customize the parameters of the on-chain contractual agreement.
Some key features of the DeFi Lease include:
The wide-scale proliferation of DeFi technologies, such as the Nolus Protocol discussed above, gives rise to a new paradigm of financial products and services leveraging blockchain and tokenized digital assets. Users can use DeFi as an investment tool to access other financial instruments such as lending, staking, derivatives trading, borrowing, or even Nolus’ novel DeFi Lease solution.
To learn more about Nolus and its unique products and services, visit their socials:
The content featured on Coinpedia's press release page is provided for informational purposes only. Coinpedia does not endorse, verify, or take responsibility for the accuracy, completeness, or reliability of any press releases or associated materials. Any views, opinions, or statements expressed in these press releases are those of the respective issuers and do not reflect the opinions or positions of Coinpedia. Coinpedia is not liable for any content, products, services, or actions mentioned in the press releases. Readers should independently verify the information before taking any actions related to the subject matter of the releases.
Turkmenistan has approved a new law that legalizes and regulates digital assets, including strict licensing…
The XRP ETF lineup in the United States is expanding again as 21Shares gets ready…
The memecoins sector is beginning to show early recovery signals after months of decline, renewing…
Rep. Jamie Raskin, the top Democrat on the House Judiciary Committee, has released a report…
KuCoin’s European arm has secured a MiCA license in Austria, allowing it to provide regulated…
KuCoin just took one of its biggest regulatory steps yet! The exchange’s European arm has…
