Decentralized Finance: A tectonic shift in how you invest your money

Decentralized Finance: A tectonic shift in how you invest your money

Recent years have witnessed never-seen-before transformations in sectors that most impact our lives! The COVID-19 pandemic dragged global markets to their rock bottoms. Just when everybody thought the financial sector had already seen its fair share of digital upheavals, along cameDecentralized Finance (DeFi). Let’s take a closer look at this inevitably growing trend in the financial sector.

What is DeFi, and how does it work?

DeFi refers to a financial system that operates without a central authority or intermediaries. In the context of traditional finance – banks, brokerages, and credit card companies – all operate as middlemen who control users’ access to financial services. But with DeFi, one can access these services directly through decentralized networks built on blockchain technology.

DeFi has the potential to cut out costly fees and improve accessibility. So how does it work? Firstly, users can deposit their crypto assets into DeFi Apps. These decentralized apps orDappswork through “smart contracts” on the blockchain, where users’ deposits earn interest rates or get involved in trading platforms. And companies are already starting to provide DeFi lending and borrowing services, insurance options, and even ways to manage investment portfolios, all on the blockchain.

What makes DeFi so popular?

DeFi has the potential to cut out costly fees and improve accessibility.

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DeFi has the potential to cut out costly fees and improve accessibility.

Decentralized Finance has been making waves in the crypto space. According to DeFi Pulse, the Total Volume Locked (TVL) has exploded from over $1 billion million in July 2020 2021 to a peak of $100 billion in November 2022 and eventually settling at over $30 billion in September 2022.

Another data byIDC suggests that Global blockchain spending has increased 7x over the last four years from $1 billion in 2018 to over $6.6 billion in 2021.

The popularity is evident from the numbers and also from the fact that people are willing to invest in crypto. As per an analysis byTriple A, there are 46 million crypto owners in the USA (approx. 13.74% of the total population). India comes second with 27 million crypto owners (2% of the total population).

One may wonder what’s making crypto grow in leaps and bounds. Firstly, optimistic speculations for this sector’s growth have already drawn significant investment. But just as important is the availability of liquidity in the system.

The DeFi app for all things crypto

Subsequently, crypto assets have been gaining mainstream attention, with more and more people eager to get in on the investment game. But it can be intimidating for those without a lot of tech knowledge to navigate the various online exchanges. This is whereCoinDCX, one of India’s leading crypto investment platforms, comes into picture.CoinDCX makes it easier than ever for smartphone users to invest in cryptocurrencies.

CoinDCX’s upcoming global wallet,Okto, allows users to start earning interest on their crypto holdings through decentralized Finance (DeFi) instruments – somewhat like Mutual Funds or Fixed Deposits in traditional Finance.

Gaurav Arora, Senior Vice President DeFi initiatives at CoinDCX said, “Our primary goal is to make DeFi a breeze. Everyone, even my grandmother, should be able to download the app and start their crypto journey. We envision Okto to become an app for all things crypto and DeFi.”

For Indian users, Okto will be available right on the CoinDCX platform. Users can transfer their crypto from their CoinDCX wallet to Okto and start earning. No more navigating confusing protocols or chains.

Final thoughts

At its core, Decentralized Finance is about eliminating the middleman. This can bring significant benefits for investors. For one, individuals have complete control over their funds and assets. In addition, not having a central authority also means the potential for lower fees and increased access for users across the globe. With DeFi, anyone with an internet connection has an equal opportunity to participate in global financial markets. Overall, DeFi’s non-custodial nature brings empowerment and democratization to the investing world.

Disclaimer: This article is a paid publication and does not have journalistic/ editorial involvement of Hindustan Times. Hindustan Times does not endorse/ subscribe to the contents of the article/advertisement and/or views expressed herein.

The reader is further advised that Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.

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