Will Ethereum-based DeFi beat the banks if rates continue to decline?
Ethereum-based decentralized financings could be the future of savings as banks continue to cut interest rates and punish savers. There are more ways to earn profits with cryptocurrencies than just speculating about future price increases and DeFi is becoming a critical factor in the future of finance.
Ethereum versus Banks
Every week, another bank cuts interest rates worldwide and many have fallen into negative territory. These efforts are being made to promote spending and credit and prevent savings.
DeFi, or decentralized finance, is a way to securely lock crypto assets through a smart contract and earn interest through credit platforms. According to defipulse.com, millions of dollars have already been blocked and the number is rising
Since the beginning of the year, the amount put on DeFi platforms has doubled and this trend is likely to continue as world economies shrink and banks continue to punish their clients.
MakerDAO is the leading platform with a dominance of currently According to a report borrower Ethereum increasingly withdraw from other platforms and use it instead as a security for MakerDAO.
Lending rates are also declining as MakerDAO beats other deFi platforms such as compound finance and dYdX. Another consequence of the lower borrowing costs is that the Dai offer has hit a record high with .
️️🖨️ 609, DAI minted
📉 Liquidation price: $ .) 53 / ETH
💳 CDP debt: 8, 464, 000 DAI 🐋
🏦 Total DAI Supply: 81 M DAI
More info: https://t.co/uVuYV0bgdT
– Maker DAI Bot (@MakerDaiBot) November 6 15336
The report added that DeFi’s big selling point this year was its ability to earn double-digit interest on dollar-linked assets.
limited access to dollars convincing. ”
DeFi rates are likely to be higher in the foreseeable future than traditional financing, as investments are riskier. DeFi is well ahead of the banking system, which today demands a ridiculous amount of personal and financial information from its customers, which is bordering on privacy breaches.
In order to become the future of finance, DeFi has to beat the banks, and it already does, in terms of returns and usability. By keeping their own funds secured by Smart Contracts, banks seem rather redundant by comparison.
With the already established Ethereum as the primary platform, there is a solid foundation for a future without central banks that have proven time and again that they can not be trusted.
As negative interest rates and fiat currencies plummet, the financial system needs a revolutionary change for both savers and borrowers. It’s just about turning off the middleman, and DeFi does just that.
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Last update: 650 Thursday, November 7 2019