Altcoin roundup – DeFi is more than just providing liquidity

While the Bitcoin price has fallen, crypto investors still have plenty of yield opportunities due to DeFi. The decentralized finance sector (DeFi), has been a constant headline throughout 2021. To date, hundreds of billions in crypto assets have been locked on protocols across multiple blockchain networks and are earning a yield for their owners. Uniswap started as an Ethereum-based swap interface that allowed ERC-20 tokens to be exchanged in a distributed manner. It was called Uniswap. Since then, the ecosystem has grown to include yield farms, lending protocols, decentralized exchanges and staking platforms. As digital technology transforms the global financial system, more projects are being developed and more of the older protocols are established. Here are some other ways that users can get involved in DeFi, besides depositing to a lending protocol or taking part in liquidity pools. Decentralized derivatives tradingCryptocurrency derivatives exchanges have long been a target for regulators, and once defiant exchanges like BitMEX and Binance have found themselves bending to the will of the law and modifying their operating practices as they seek a more legitimate standing. This has made it more important for crypto traders to have a decentralized option. It has also led to protocols like dYdX or Hegic that offer similar services without having to target a centralized structure that regulators can pursue. DYdX, a non-custodial perpetuals trade platform that operates on Ethereum’s layer-two protocol, offers users up to ten times leverage for futures contracts for more then twenty cryptocurrencies. Hegic, an on-chain options trading protocol, uses hedge contracts and liquidity pool to offer options contracts that can last up to 90 day and can payout in Ether(ETH), Wrapped Bitcoins (WBTC), or USD Coins (USDC). Hegic’s maximum holding period has been reduced from 90 to 30 days. This change does not affect any options previously acquired. The current volatility will be used to adjust the period to prevent active LPs selling too cheaply. pic.twitter.com/JiVBVH5xD2– Hegic (@HegicOptions) September 8, 2021 Both of these platforms offer users access to these advanced trading products without the need to divulge their identities, as is required on the centralized counterparts. Bonding, rebase, and ultra-high APR tokensAn increasing number of financial discussions are centered on the idea of creating a decentralized reserve currency that is not under the control of any government or central financial institution. Olympus is a decentralized autonomous organisation (DAO) platform that offers staking and various bond options, including the ability to bond Ether (DAI), MakerDAO (DAI), Liquidity USD(LUSD) or Frax (FRAX). Our third reserve bond, $LUSD, was just launched! Welcome to @LiquityProtocol the Olympus Treasury. pic.twitter.com/34IKpTFG5l– OlympusDAO (@OlympusDAO) September 22, 2021 The bonding process on Olympus is basically a cross between a fixed income product, a futures contract and an option. Bonders receive a quote that outlines terms for a trade at a future time. It also includes a predetermined amount OHM token, which the bonder will get once the vesting period has ended. Bond offerings raise funds that go into the Olympus Treasury as collateral. This helps to provide the OHM token’s underlying value, which can be used as a reserve currency and medium of exchange. Stablecoins are the only other projects with a treasury that provides the token’s underlying value. However, their price is fixed, whereas OHM’s can rise, providing a new avenue for yield. After bonding is completed, users can either sell their OHM on an open market or stake them on Olympus for a current yield 7.299%. Related: CFTC renews: What Biden’s new agency picks for crypto regulation. Crowd loan participation on Polkadot, Kusama. Another way crypto holders can put their assets into use while helping the cryptocurrency ecosystem grow is to participate in the parachain auctions within the Polkadot or Kusama ecosystems. This is known as a crowd lending. Different projects compete for one of the few parachain slots. This allows the project to connect directly to the Polkadot or Kusma network, which facilitates the interconnection of all parachains within the ecosystem. Crowdloans allow users to “contribute”, or use the native KSM or DOT tokens to the pool used by a project to secure a parachain slots. Tokens will be returned after a specific lock-up period, which can last up to one year. Current #Kusama crowdloan stats, 995k $KSM was contributed to 16 projects. 88% (875k$KSM) was used to secure a parachain slot. Tokens will be returned after a specified lock-up or bonding period. Users receive a specific number of tokens for new protocol in exchange for their contribution. These tokens can then be used within the ecosystem or traded on the market. This approach provides token holders with a lower risk yield opportunity, since all principal contributions are secured in a smart contract. They are then returned after the specified lock-up period. Parachain auctions are a complex process. There have been projects with large communities that have secured parachain slots. This increases the likelihood that tokens will increase or maintain value, as long as the development for the protocols continues. The DeFi ecosystem is not showing any signs of slowing down its integration of the best parts the traditional financial system and creating innovative protocols that level out the playing field for retail investors, aside from the threat of regulation. You can find more information about investing and trading in crypto markets at Polkadot.com. You should do your own research before making any investment or trading decision.

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