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Crypto Takeover: $481 Million in Bitcoin and Ethereum Locked in Alternative Financial Instruments

August 11, 2019

Crypto entrepreneurs are rapidly constructing a new decentralized finance (DeFi) ecosystem. The crypto-based movement is designed to replace traditional financial instruments with a decentralized alternative that’s not controlled by corporations or governments.

According to data from DeFiPulse, there’s currently around $481 million worth of cryptocurrency locked into various decentralized finance protocols and platforms. Maker, an Ethereum-powered peer-to-peer (P2P) lending system, has contracts worth a total of $280 million, at time of writing.

Other Ethereum-based decentralized lending platforms, such as InstaDApp, and Compound, a protocol for borrowing and lending digital currencies, have approximately $25 million and $98 million in value locked into their contracts, respectively. In statements shared with TechCrunch regarding Compound’s ongoing growth and development efforts, the firm’s CEO Robert Leshner says,

“If/when Compound scales, this will lead to some really interesting improvements in market structure, namely, fairer prices.”

Decentralized finance (DeFi) has reportedly become one of the hottest sectors in blockchain. According to blockchain incubator ConsenSys,

“All in all, decentralized finance projects now range in the thousands, and we’re seeing the early stages of a whole new industry.”

The evolving DeFi ecosystem also includes insurance platforms, key infrastructural development, digital asset marketplaces and investment engines.

Approximately $11.8 million in crypto contracts have been issued through the Ethereum-based Dharma protocol, which lets users borrow and lend digital currencies with “trustless collateralization” in more than 50 ERC-20 compliant tokens.

Max Bronstein, the business development manager at Dharma, says,

“We envision a world in which anyone can compound their wealth or take out a line of credit from anywhere in the world. No bank account or credit checks required.”

Uniswap, a decentralized protocol for “automated token exchange,” has about $17 million in value issued through its contracts. Uniswap’s creator, Hayden Adams, has managed to secure investments for the P2P lending protocol from San Francisco-based venture capital firm Paradigm. 

In April 2019, Adams revealed via Twitter how he launched his company, which is focused on building open finance products. 

2/

Uniswap started as a side project for me. A way to learn the required skills to transition from mechanical engineer to crypto dev.

This is what it looked like in Nov. 2017 when it was my first smart contract, first website, and first major coding project! pic.twitter.com/EUkPV0X7sM

— hayden.eth ? (@haydenzadams) April 23, 2019

In addition to Bitcoin’s Lightning Network, a leading DeFi protocol and layer-two payments solution for conducting fast and cost-effective micropayments, Augur (REP), a decentralized Ethereum-powered prediction markets platform, and Bancor (BNT), a protocol that seamlessly converts between two different crypto tokens without requiring an exchange, also fall within the DeFi ecosystem.

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