In recent months, investments in the local and international financial markets have suffered severe blows. The bonds, funds and stocks suffered phenomenal falls that hurt savers and investors. The crisis due to the economic consequences of the coronavirus and oil prices is taking everything ahead and world markets have already lost trillions of dollars. Given this scenario, the criptomonedas offer options immunity. Even the major and volatile cryptos have seen their value double since the start of the global quarantine.
In the local context, the need to safeguard the value of savings, to achieve positive returns on investments against the drop in rates and the limitation on the purchase of dollars and inflation are becoming increasingly complex challenges. This is how a new type of market based on blockchain emerges, which more and more Argentines are beginning to take into account and whose fuel is stable cryptocurrencies: the decentralized finance market.
It is a financial ecosystem that works outside the traditional one. In practice, it recreates banking services, but without a centralized entity that controls it. They are a kind of bank that allows you to maintain funds and carry out transactions, such as credits, loans and other products that are governed by blockchain technology and crypto.
A new market that is getting stronger
In recent weeks, the decentralized finance market has reached an asset deposit value of 1 billion. It was an exponential growth since in December it did not exceed 500 million. Increasing volume is a confidence gauge, as more and more individuals around the world seek to access more efficient, inclusive and transparent money. It is a trend that does not stop growing.
This finance market allows the construction of various tools and services in a decentralized way, with the transparency of a blockchain and smart contracts that automate processes to generate customized financial instruments, without the intervention of third parties. In this way, people are in control of their own assets at all times. The fact that all the protocols are open source allows any programmer to create new products instantly, making the ecosystem develop at full speed and with high returns, allowing the community to audit each digital product, with the consequent security that this provides.
Allies of weight
Since 2019 the growth of cryptocurrencies is increasingly a consequence of financial institutions that begin to diversify their portfolios and rise to the blockchain world. Exchanges (exchange houses or sort of online cryptocurrency banks) provide more and more services, increasing their capacity to personalize the interaction with the users of their platforms and provide technological tools that are better adapted to each type of public.
The institutional investors rely heavily regulated products and processes, therefore rely on the steady progress on the regulatory front and infrastructure improvements. This will open the doors to greater participation and volume of money. These types of actors will undoubtedly set the pace for investments for the rest of 2020, given the speed of professionalization. Its emergence will change the weight of this market.
The stablecoins moment
The supply of Bitcoin is approximately halved every four years, with the purpose of generating shortages and monitoring the inflation of this cryptocurrency. This reduction that will occur today could have a very important impact. Due to this event, the most popular peer-to-peer lending applications look for stable coins, which have as their main quality that their value is constant and grant a quick exposure to Bitcoin or Ethereum.
The benefits of a stablecoin
DAI is the only user-generated cryptocurrency that maintains its stable value around € 1. Backed by other tokens or cryptocurrencies like Ether, this guarantee is kept in a smart contract and removes the biggest fear around other famous cryptocurrencies, volatility. A DAI is and will be equivalent to a dollar because it is self-regulating automatically. It is used by those who contribute to investment funds, people who only use it as a means of payment, and those who seek protection of their capital.