Decentralized Finance Platforms are Proving to Return High Rewards with Minimal Risk

Decentralized Finance and Bitcoin have come along way, especially since the bottom of the crypto bear market of 2018, but which is positioned to have the best year ahead?

Bitcoin was the pioneer of the decentralized space which promised high lucrative returns but with higher risks involved. Bitcoin price is highly volatile where its prices have fluctuated more than 40% in a single day this year itself, so investing in cryptocurrency requires a lot of market knowledge and knowledge in reading trade patterns.

Even though Bitcoin is a decentralized digital currency in itself, the mediums through which these are transacted are not decentralized which leads to cases of price manipulation as well. However, a new form of a financial platform called decentralized finances (de-fi) has gained a lot of popularity in the past year.

TokenAnalyst a crypto market analyst firm recently tweeted about the gains made on the investment in Bitcoin, Ethereum and a couple of defi platforms. The analysis found that if a person would have invested $1,000 at the start of the year in Bitcoin they would have made a 133% gain, while investment in Ethereum would have got them a 36% return. On the contrary, the two de-fi platforms taken into consideration would have returned just 5% and 22%.

These de-fi platforms usually act as a lending and borrowing platform where users can lock in their Ethereum to either borrow a loan against it or earn a reward based on the amount and time of ethereum locked in the smart contracts. However, the most important aspect of these platforms is that they involve a minimum amount of risks which is negligible when compared to the likes of Bitcoin and Ethereum whose prices are bound to move either way depending on the market sentiment.

The Growing Market or De-Fi

De-Fi platforms have seen a 140% rise in investment since the start of 2019 where at present about $660 million worth of cryptocurrencies are locked in different de-fi platforms. The stats are a clear indication that people have started to understand the de-fi ecosystem and its benefits.

Another thing to note here is that de-fi platforms are only a year old while Bitcoin has been there for a decade. Given the worsening condition of the traditional financial ecosystem where several banks have gone on to offer negative interest rates, as this situation worsens, people would start looking for alternatives. With de-fi platforms offering 5-20 percent interest rates on the locked digital assets, it would prove to be a lucrative alternative.

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James W
James is a cryptocurrency enthusiast, an advocate for the development and exposure of blockchain technology, and believes in the use of digital assets for the good of the society. Enthralled by the huge potential of cryptocurrencies and their underlying technology – blockchain – James dedicated himself to learn more about the industry, becoming a highly sought-after writer in the sector. He covers news, white papers and any content related to cryptocurrency and blockchain in general.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

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