Decentralized Finance (DeFi) has gradually taken the center stage of crypto discussions as more innovators and investors shift focus to this upcoming niche. A few years back, the concept of financial products in decentralized markets would have sounded absurd, this is now a reality thanks to blockchain networks like Ethereum. Today, the DeFi market has a total locked value of $2.5 billion, most of which was injected within Q2 2020 according to the latest ConsenSys quarterly report.
Going by these developments, it is not surprising that academics have started to pay more attention to DeFi products as well. PlutusDeFi, a full-stack aggregator in DeFi solutions, is one of the projects which recently attracted two major academics to support its P2P financial ecosystem. Paolo Tusca, a Computer Science professor at the University College London (UCL) and George Samman, an International advisor with experience in financial institutions and startups will be joining the PlutusDeFi project.
Despite the competition from industry stars like Kava, Compound and MakerDAO, innovations to sort the underlying DeFi challenges continue to pop up. Investors on the other hand seem to be gradually accepting fundamental solutions such as the ones embedded within the PlutusDeFi ecosystem. Since its launch, the project has attracted significant funding raising over $1 billion from its seed and private token sale. Notably, PlutusDeFi prominent investors like NGC Ventures recently doubled on their contribution as one of the firm’s partner, Rodger Lim, hailed the future of DeFi,
“DeFI has the potential to be an integral part of our financial system. Being so requires privacy to protect your finances from the public eye. PlutusDefi introduces privacy to DeFi and will help push greater adoption for DeFi.”
The Shift to DeFi Ecosystems
Though still largely underdeveloped, stakeholders in financial markets can only ignore the ongoing work at their own peril. For long, the world has operated under centralized networks to an extent where large ‘monopolies’ in the social media and e-commerce space have consistently benefited from ‘good strategies’. Contrary to the popular narrative, these entities have only but capitalized on their large market shares to make things happen to their advantage. Well, a new paradigm shift to DeFi networks is about to change the status quo.
Some of the DeFi underpinnings offered by the likes of PlutusDeFi include financial products that were previously found in centralized traditional markets only. The platform features an array of financial products including Insurance, lending, Privacy function, Decentralized Exchange and a fiat-to-crypto savings bridge. Unlike traditional markets, interested prospects can leverage the PlutusDeFi ecosystem to secure or lend funding with just a few clicks via its MVP product ‘Lend & Earn’. Basically, PlutusDeFi decentralizes what we know today as modern-day finance by creating an environment where contributors can earn interest and rewards via its native token, PLT, in a move to incentivize growth.
Other than DeFi products, academics are taking interest in what could define a new era in money supply. While central banks use monetary policy tools such as printing money in some instances, decentralized environments borrow from Bitcoin’s fundamentals which dictate a finite supply. That said, PlutusDeFi, has come up with a hybrid tokenomics strategy to maintain the value of its native token from seed stage funding all the way to its sunrise phase. This platform leverages the bridge toll model combined with a bonding curve hence reducing possible pump liquidations by seed investors before the end of PLT token sale. Practically, a 55% fee is set on any conversions to liquid crypto markets within the first month and reduces progressively by 20% up to month 9, after which no cost will be charged.
Last but not least is the anonymity option in operating within crypto ecosystems, a feature that has now been integrated in the DeFi space by PlutusDeFi. This Ethereum-built protocol allows users to on-ramp their funds anonymously through PlutusDeFi ETH bl3nd3r and privacy mixers like Tornado Cash. Notably, anonymity functions have been fairly criticized by central authorities but the demand seems to be increasing as pressure mounts for innovators to adhere to upcoming regulations such as the FATF ‘Travel Rule’. Despite this being the case, investors and academics have doubled efforts in privacy protocol research and funding to meet the growing demand.
A Market on the Rise
With such a value proposition, the DeFi market is likely to make inroads to economies that were previously excluded by the banking ecosystems. This is because of the ease of on-boarding users to DeFi products through on-ramp channels that provide digital money solutions. PlutusDeFi for instance plans to integrate with notable digital payment channels in Africa including M-Pesa and Lipisha. In doing so, the project is optimistic of tapping the growing markets by introducing the people to decentralized economies for lending and borrowing funds amongst other financial services. Currently, such services could take up to months before approval on top of the hustles that come with opening a bank account. Therefore, DeFi as a whole ecosystem stands a great chance of solving these challenges as we forge a path to the virtual and borderless economy.