DeFi

The crypto world has been caught in an explosion of popularity in non-fungible tokens, with investors around the world flocking to OpenSeas as they scramble to bid on the latest digital art fads.

Global interest in tokenised digital art has driven astonishing auction bids such as the now infamous EtherRock – which sold for an incredible $836k.Some of the most popular and original are known as NFT profile pictures (often referred to as a ‘photo for proof’ or PFP) and give the user exclusive ownership over digital avatars.

The prices of these PFPs vary depending on the trends of the week – some of the most successful PFP projects have been the Koala Intelligence Agency and Bored Ape Yacht Club.

Is there any utility?

But, as a reality check amid the manic NFT hype in 2021, it’s worth taking a step back to assess the potential use cases that could see NFTs revolutionise the way we live.

Besides the obvious benefits afforded to digital arts by tokenisation, there are numerous emerging use cases across the industry.

The immutable and easily transferable nature of NFTs could make them the perfect means of demonstrating ownership of real estate – with experts speculating we will likely see land registration records connected with tokenised deeds for both residential and commercial properties.Another potential use case is for stock and bond certificates.

Again, being instantly transferable, immutable, and digital affords a host of opportunities for revolutionising investor experiences.

One suggestion is that this could be effectively tied together with corporate dividend programs, with the NFT used to demonstrate ownership of stock and recipient eligibility for dividend pay-outs to the wallet that holds the asset.

This has already been trialled by iGaming company F1 Delta Time back in 2019. The project, which offers 5% NFT dividends to asset owners, has been an extraordinarily successful with the first F1 Delta Time NFT selling for $100,000.

Speaking of iGaming, this represents perhaps the largest area of pioneering growth for NFTs with industry adoption exploding through the use of NFTs to tokenise in-game content and items.

Empowering the identification and credibility of a document is the turn-key function at the heart of the NFT revolution. Needless to say, this has led to a plethora of government and corporate uses.

Covid-19 has been a surprisingly big driver of NFT innovation, with many countries such as San Marino tokenising digital covid vaccination passports in an effort to fight back against false documentation. This could cut a path for digitised passports, driving licences and birth certificates.

This could also be used for simpler purposes such as concert or event tickets, with the added functionality of becoming an exclusive one-off collectible item. It would be unsurprising to see a big market for re-sale of NFT tickets from legendary concerts, with fans keen to own a slice of history.

Finally, among the latest emerging NFT use case trends is the hosting of immutable domain names that can be used instead of long and complex DLT wallet addresses. Unstoppable domains is driving this technology forward.

More crypto news and information

If you want to find out more information about Bitcoin or Non-Fungible Tokens in general, then use the search box at the top of this page. Here’s an article to get you started.

As with any investment, it pays to do some homework before you part with your money. The prices of cryptocurrencies are volatile and go up and down quickly. This page is not recommending a particular currency or whether you should invest or not.

The world’s leading decentralized exchange, Uniswap, has announced the delisting of a number of tokens from its app interface.Uniswap Labs made the announcement on Friday, emphasizing that the tokens had been removed from the app interface only and that the protocol remains immutable:

“These changes pertain to the interface at app.uniswap.org — the Protocol remains entirely autonomous, immutable, and permissionless.”

The company Uniswap Labs is the software developer that has built the front-end web app portal. The front-end is separate from the Uniswap protocol itself, which is autonomous code that was released as a public good.

In the blog post, Uniswap Labs hinted that increased regulatory pressure may have influenced its decision, stating, “We monitor the evolving regulatory landscape.

” The company also described the move as “consistent with actions taken by other DeFi interfaces.

”The tokens that have been delisted from the platform’s interface include instruments that may be at risk of being classified as securities by a regulator, including tokenized stocks, options tokens, insurance-based tokens and synthetic assets from crypto derivatives platforms like Synthetix.

Gold-backed token Tether Gold (XAUT) is among the assets targeted, however, Uniswap founder Hayden Adams attributed XAUT’s removal to buggy code. Meme-themed tokens including Grumpy Cat (GRUMPY) had also found their way onto Uniswap’s blacklist.

The reaction from the crypto community saw Uniswap’s purported decentralization called into question. Industry observers such as ChainLinkGod asked why Uniswap’s UNI holders did not get to vote on the delistings, tweeting:

“Not very informative here. Was this decision made through governance vote? If not, this opens a whole can of worms and sets a terrible precedent.”

Uniswap is currently the leading decentralized exchange by trade volume, with the protocol’s v2 and v3 versions facilitating a combined $1.45 billion worth of trade in the past 24 hours.

Related: Concern as Uniswap-backed 'DeFi Education Fund' dumps $10M worth of UNI

Regulatory pressure on the crypto sector is mounting across the globe, with Binance and BlockFi recently incurring the wrath of authorities in the United Kingdom and the United States, respectively.

As reported by Cointelegraph on Thursday, the Texas State Securities Board has joined its counterparts in New Jersey and Alabama in taking action against the crypto lending platform.

Vermont became the fourth state to issue an order against BlockFi on July 25.

Cryptocurrencies have garnered something of a reputation as being fast, dangerous and lethal for many — so much so that the average investor is scared of digital assets.

The volatility that’s associated with this new asset class has also meant that gaining exposure to the world’s biggest coins has been likened to an experience that’s not for the faint-hearted — or, in traditional investor terms, “not for the wise.

”Inevitably, this will spark endless debate on whether crypto is something for everyday consumers to be scared of. Is investing a small percentage of one’s portfolio into digital assets prudent or reckless?

Are regulators going overboard when they warn that people who purchase cryptocurrencies should be prepared to lose the shirt off their backs? And are there any ways for people to enter this exciting but intimidating world safely?

The current mood music surrounding cryptocurrencies have created something of an echo chamber within the nascent DeFi ecosystem.

Traders are predominantly the people who use these protocols. This creates wider ramifications for fledgling projects that are seeking to enter the space — and a rather unpleasant dilemma comes to the fore.

Should new platforms adopt a long-term view and build an environment that’s built for the masses, meaning they may only attract a small number of users for the foreseeable future?

Or should they create ecosystems that are designed for traders — something that could attract a large but fickle following who are always looking for a new project to move on to?

Across the DeFi ecosystem, a vortex of projects is simultaneously aiming for very different target markets. Some are living in the now, while others have their sights firmly set on the future.

Understanding the average person

For the holy grail of DeFi to be achieved — the much-anticipated milestone of mass adoption — it’s worth taking a step back and considering what the typical consumer is like.

Of course, everybody likes an opportunity to make a quick buck. But those already in the crypto space often take for granted that many consumers are unprepared to take the type of risks that are often associated with the fast-moving, 24/7 world of trading digital assets.If you’ve been involved in the crypto space for years, it may also be difficult to appreciate that most trading platforms are exceedingly confusing for newcomers.

The crypto curious end up being bombarded with information — far more than they can realistically process — and this doesn’t foster an atmosphere where they can feel confident in the choices that they make.

News websites like Cointelegraph can help — and there are an ever-increasing number of educational resources that are geared toward beginners. But there’s also a danger that those who end up getting their news from social networks may end up being suckered in to buying whichever coin is pumping at the moment and losing money in the process.

Although the worlds of DeFi and retail banking are like night and day, there are things that these two financial worlds have in common. Leveraging this can be the key to unlocking mass adoption — presenting decentralized finance in a way that the public will understand, even if they have no interest in getting their heads around spreads and technical analysis.

Breaking it down

Most consumers understand that, living in a world where interest rates are low and inflation is through the roof, they are losing money on a daily basis.They’re familiar with the concept of savings accounts — and the fact that their nest egg can grow if it is locked away for a set amount of time.

Platforms such as UniFarm say they deliver a familiar experience for crypto newcomers who crave simplicity. Now, all they need to do is find a token that they believe in and stake it.

Returns are automatically diversified on their behalf — and crucially, funds can also be unstaked at any point. This gives peace of mind to those who may be feeling nervous about having their assets locked away for extended periods of time.

UniFarm says that its app is both clean and simple, packaged in a user interface that anyone will be able to understand.

This helps reduce the risk of inexperienced users making costly mistakes by pressing the wrong button, or not knowing how to complete a transaction.The platform’s co-founder and chief operating officer Tarusha Mittal said:

“At UniFarm, our aim is to help DeFi appeal to the masses by being simple, smart and adding massive value.

”Mittal and fellow co-founder Mohit Madan describe themselves as long-term serial entrepreneurs in the world of blockchain — and both have now been in the space for over a decade.

They together founded one of India’s first Ethereum exchanges in 2015 and now have a massive undertaking in the form of OroPocket — the parent company of UniFarm and another project called OpenDeFi.

UniFarm had a working product in place by late January 2021, and a plethora of milestones have been achieved over the past four months.

This included a successful $2 million funding round that was led by AU21 Capital and a number of other notable blockchain funds.

The cryptocurrency world is prone to hype, whether on the grand scale of the ICO boom and Bitcoin price pump of 2017 or the lesser scale of a new project or platform launching.

This year has been all about DeFi and its revolutionary potential to reshape finance. In February, total value locked in decentralized finance applications exceeded $1 billion for the first time. By late October, it had hit $12 billion. The growth reflects the increasing willingness of traders to speculate on this nascent and largely experimental sector.

With the potential for returns bordering on the ridiculous — 52,000 percent in one estimate — it’s hardly surprising. But activity in DeFi is now showing signs of slowing down, with the volume on decentralized exchanges starting to drop off. Perhaps this was inevitable, but it represents a timely moment to reflect on some of the lessons learned from riding the DeFi rollercoaster. 

1. DeFi can be dangerously exposed to price manipulation

Price manipulation became a problem early in 2020, as users sought to exploit the relatively new availability of flash loans. A flash loan involves taking out an uncollateralized loan using a protocol like Aave or dYdX, and using it in one or more related trades, then repaying the initial loan and pocketing any profits. The catch is that the entire series of events has to be performed within a single Ethereum transaction. 

One challenge of decentralized finance is that the Ethereum blockchain doesn’t know the market value of the tokens based on its platform. Therefore, DeFi protocols use price oracles to settle trades. In February, a trader took advantage of the fact that bZx, a lending protocol, used the prices on decentralized exchange Uniswap as its price oracle.

With low liquidity in a particular Uniswap pool, it was easy to borrow enough in a flash loan to dump tokens on Uniswap, forcing the price down while a parallel trade took out a long position. The trader came out of this chain of events with $330,000 in profit. 

So, what can we learn from this? DeFi needs better price oracles. Relying on a single data point with fluctuating liquidity represents a vulnerability. Decentralized oracle services such as Kylin Network aim to overcome this challenge.

A decentralized oracle doesn’t use a single price feed. Instead, it takes data from many different sources. Kylin Network is developed on the new interoperability platform, Polkadot.

Therefore, it is a cross-chain protocol that can both take data from multiple blockchains and be deployed on applications running on any platform. By using price oracles that take data from multiple feeds, then engineering an arbitration mechanism that allows for real-time validation, DeFi applications can reduce or even negate the risk of price manipulation. 


Related: Getting Drawn Into DeFi? Here Are 3 Major Considerations

2. Unaudited code is a risk

As developers rushed to get their DeFi applications out to the markets amid the hype, it became apparent that anything goes as far as code is concerned. This year, there have been several incidents illustrating the dangers of unaudited code. 

In April, hackers exploited a vulnerability in lending app dForce that affected a particular type of Ethereum token, stealing $25 million worth of funds. However, it should never have been allowed to happen, given the vulnerability was known among Ethereum developers.

Reputable projects like Uniswap and Compound had already issued upgrades to address the issue. For its part, dForce had simply copied and pasted an older version of Compound’s code that still contained the vulnerability. Such is the appetite for DeFi that some developers are finding traders will start using their code even before they’ve confirmed it’s ready for release.

In October, whizzkid developer of the popular yEarn finance protocol, Andre Cronje, confirmed he was developing a new dApp called Eminence. Investors started pouring funds into it before he had even released it. Some of them later sent Cronje death threats after hackers realized what was going on, exploited the unfinished code and stole their funds. 

In the latter case, an easy lesson for DeFi investors is not to put your funds into unreleased protocols. However, the first case illustrates that developers need to ensure that their code is robust against attacks.

Some projects, such as the Polkadot-based Equilibrium, are addressing the issue head-on by engaging external code auditors.It’s still early days, but the Smart Contract Security Alliance is a coalition of blockchain auditing firms that aim to create standards for smart contract security.

Ultimately, this could prove to become a stamp of credibility, indicating applications that are operating safe and secure code. 

3. DeFi tokens are probably overhyped

DeFi tokens, earned through the practice of yield farming, have been the new ICO token of 2020. Like their ICO predecessors, most of them underwent price spikes driven by initial hype around the token.

The boom and bust pattern is observable in tokens from established DeFi projects, including Compound and Uniswap, which fell 70 percent and 60 percent respectively, between their launch dates and the end of October. Perhaps unsurprisingly, the trend is no different in the newer DeFi projects released this summer, none of which managed to retain their initial value. 

Related: 8 Smart Ways to Analyze Crypto Token Before Investing in It

This price pattern isn’t necessarily an indicator that these tokens don’t hold any longer-term value. Some of them confer governance rights, such as voting on particular developments within a project, similar to company shares.

These features may help them sustain their price level stability in the longer-term.

However, when a new DeFi project token emerges, and the price is rocketing to meteoric highs, chances are it’s not a sustainable long-term investment. In the case of DeFi tokens, the best advice is the oldest adage in the crypto sector — do your own research. 

Bitcoin had its strongest month since April as a surge in Ethereum followed an announcement on its ETH 2.0 upgrade – but the DeFi party ‘ends abruptly.

’Those are the key takeaways from Binance’s October trading report – the first of which was at the start of this year – which looks to assess the key information and data on trading activity across crypto-futures markets.In October, Binance noted, Bitcoin gained more than 27%, crossing above the $14,000 mark for the first time since June last year.

Yet for Binance’s DeFi (decentralised finance) index, the market has seen plummeting returns for a space which saw a ‘phenomenal run’ for most of this year.As reported by various publications, the start of September saw the vast majority of top DeFi tokens lose more than 50% of their value.

Messari, a provider of market data for DeFi assets, noted the change. Analysts at the time saw the primary reason as a straightforward market correction, noting assets were overbought during the growth period.Binance saw a negative correlation between DeFi tokens and Bitcoin, as well as something of a negative between DeFi and Ethereum.

This is despite Ethereum powering much of the DeFi ecosystem. Yet there is a silver lining: the sector’s underlying fundamentals have remained stable, according to the trading report, with steady growth in spite of dying hype ‘underlining [its] long-term potential and investors’ interest.

’For Ethereum, a slew of updates around the upcoming Ethereum 2.0, which will allow a much greater number of transactions, helped boost signal this month.

Phase 0 for ETH 2.0 has been formalised for launch, with the expected launch date – subject to the contract collecting 16384 deposits of 32 ETH each – around December Ist

 Vitalik Buterin sent 100 transactions for 32 ether each last week.

ETH is currently priced at just under $440 at the time of writing, up from $420 as the Binance report dropped. The company added that moving Ethereum’s consensus mechanism to proof of stake, reducing the supply of tokens while maintaining demand, will also help.

“The upgrade could drag out ETH from its recent slump and potentially inject more positive sentiment into the altcoin sector,” Binance noted.You can read the full report here.

Decentralized Finance has been all the rage lately. However, while all the hype was focused on DeFi, Non-Fungible Tokens (NFTs) have also increased in popularity.

Unlike BTC or ETC, an NFT is a crypto token that has the characteristics that ensure an identical token is not interchangeable with it. Therefore, NFTs create digital scarcity, ownership, and uniqueness for the crypto space.An increasing number of innovative projects are arising with NFT that have extremely creative ways of generating value.

For example, just last week, more than $1.8 million was traded through the crypto-collectibles market. Let’s take a look at some of the most promising aspects of NFTs and their wider implications for the blockchain industry.

The Most Diverse Audience to Date at FMLS 2020 – Where Finance Meets Innovation

The Features and Advantages of NFTs

Some common features and advantages of many NFTs include being ERC-720 compliant, which means they can be used in the storage of crypto-collectibles such as in crypto gaming or art, providing a means of proving authenticity and ownership.

The hype around NFTs started in earnest with CryptoKitties, which at one point saw the price of a single digital collectible feline surpass $100,000. Developed on Ethereum by Axion Zen, CryptoKitties was a blockchain




Jay Hao, CEO of OKExgame that allowed users to purchase, sell and collect virtual cats. In the years since the NFT space has become more diverse with major players such as Internet giant Kakao rolling out a wallet that will support NFTs.Compared to the common ERC-20 standards of most tokens and dApps, many NFTs are built instead with the ERC-721 token standard.

ERC-721 standard can be a way for significant assets to be tokenized on a public or hybrid blockchain with both immutability and security.

While pretty similar in functionality to ERC-20, ERC-721 is easier for developers to make a transition in developing and architecture. ERC-721 is also easy for users to store tokens in ordinary wallets and trade them on exchanges. With ERC-721, a token’s unique ownership details are added in addition to the address and balance on the blockchain.

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One of the qualities that make NFTs so attractive is aesthetics that many users will find familiar. While other tokens have a symbol and exist on the blockchain, they cannot be physically owned, and envisioning their supposedly invisible ownership is hard for many newcomers to comprehend.

However, many projects such as Nifty Football and CryptoKitties come in the forms of virtual card games and pets and make use of concepts familiar to many users from childhood.

The advantage of blockchain environments is they permit players to gain true ownership of their in-game items. With non-fungible tokens (NFTs) and digital collectibles, games based on the blockchain can revitalize a new economic system that enables gamers to earn while they play.

In fact, the appeal of NFTs is starting to extend beyond games and collectible cards, even the major traditional auction house Christie’s is now starting to tokenize some artwork through NFTs.

The Challenges NFTs Still Face

However, there are challenges in implementing NFT projects. For example, if a tokenized piece of artwork was split up, it may be subject to securities regulation law. In addition, although centralized players have made strides in innovative trading tools and crypto education to make the industry accessible to all, the industry is still difficult for less tech-savvy users to enter into.

For the less tech-savvy users, even tasks such as managing private keys and setting up wallets could create barriers to entry. Lastly, while the line between centralized and decentralized is becoming blurred, some notable NFT projects such as Enjin Mintshop and Terra Virtua involve marketplaces and would need to effectively bridge that gap.

While all the attention has been focused on DeFi, there is some crossover appeal with NFTs, which could make an impact on insurance policies that have unique properties.

Could it be the future holds more cases of tokenization of insurance policies mixed with yield farming? For advanced uses such as NFT for insurance, the DeFi space still has a way to go in terms of stability, equity and transparency. However, the rapid progress made so far and wide application of use cases shows much promise.

The hype around DeFi is not fading away and is only just beginning, said Neo founder Da Hongfei, during a live stream on China’s Hub on Sept. 25.

Da said DeFi created a process in just a few years that traditional finance took hundreds of years to perfect.

DeFi projects are now experimenting with all sorts of financial products and services. He added that:

“Lending and borrowing, decentralized exchanges, insurance and all kinds of derivatives are on the rise in DeFi. The initial stage DeFi infrastructure has a solid good start, and now it is time to see more and more applications to be built and innovated on DeFi.”

According to Da, DeFi has brought numerous new possibilities in the financial arena, including creating a new type of asset that allows users to access cash at any time. DeFi, Da said, will have a significant impact on future economic life.

He predicts people will not need banks in the future as they turn towards DeFi services. And this scenario may already be happening. Using China as an example, Da said:

“Chinese people have done this more or less, probably dealing with banks, dealing with Alipay and WeChat, at least doing this kind of financial behavior without going to the bank.”

Da, and Binance co-founder He Yi, revealed in the live stream that Neo and Binance are actively looking into DeFi applications. One such application is Flamingo, an interoperable, full-stack DeFi protocol built on the Neo blockchain. It allows users to participate as traders, stakers, and liquidity providers.

Binance has announced it listed Flamingo on its launch pool on Sept. 23. Both are also looking to build DeFi infrastructure further.As Cointelegraph previously reported, China’s state-endorsed public blockchain is looking into building a regulatory compliance platform that can bridge global DeFi applications and government regulations.