Why Defi Is Hot Right Now and How Safemoon Will Dominate Crypto

A new wave of funding is coming, and it’s going to change the way money is handled. Have you ever considered the fact that you actually don’t have money in your bank account? If you have thought about this, decentralized finance is up your alley.

Decentralized finance (DeFi) is the most recent development in cryptocurrency. Why is this a development? It is a system where the software is coded to cut the broker in the middle.

DeFi’s premise is a system where coding is written to interact directly with buyers, sellers and lenders to allow borrowers to interact peer-to-peer or directly with software-based applications. This is different from all banking systems where users must interact with a single company, which makes it decentralized.

DeFi is created as an extension of blockchain technology, where DeFi is a decentralized system consisting of a mix of open-source technologies. These transactions are done using smart contracts that allow for automated agreements and faster transactions between buyers/sellers or lenders/borrowers.

DeFi is thus able to remove middlemen and act as a peer-to-peer transaction.

Think of a decentralized finance system as a process like this – when you go to a coffee shop and pay for coffee with a Visa card, these payments go through Visa, which acts as an intermediary to send money to the recipient acts as. They control the transaction, and ultimately have the authority to make payments. With DeFi and cryptocurrencies, the holder of crypto remains the right to transact, which, in turn, allows you to keep your money.

Payments are not the only aspect of decentralized finance that is intriguing about this development in blockchain technology.

Here are some of the more popular methods that are being used

1. Lending Platform

These are platforms that allow users to lend their crypto to users as a loan based on the amount held in their account. This is an area that works like a bank, where the user can borrow a certain percentage of their account without having to withdraw it from their holdings, instead of going through a credit check. Example – Users have $100,000 and are able to borrow up to 50% of their stake at 3% interest. If the user pays on time – the account is completely restored to its full value. If the user is not able to make payments on time, the lender will take control of the amount borrowed from its holdings.

2. Produce-cultivation

It is a platform where an investor will collect cryptocurrencies/tokens and lend them to borrowers, in return, paying interest to the investor. These rates can be fixed or variable, depending on the crypto asset and platform. This strategy is based on earning a high yield return on the assets in the account. This is a straightforward way to earn up to 100% APY on a single crypto asset. This type of return can be reversed in the same coin or in another coin. As the value of the coin increases over time, the return of the coins can help increase the rate of return. This is different from a regular bank account, where the money can earn interest on the money which will only decrease in value over time.

3. Tokonomics

This is one aspect of cryptocurrency where it creates price stability over time, which has been the biggest area of ​​concern – price volatility.

  • It redistributes crypto assets to help reward validators or holders for maintaining a specific coin.
  • This limits inflation and creates a deflationary coin that increases in value over time.
  • This aspect can be thought of as a reflection of block rewards or trading volume.

An example of this would be a block reward for mining (verifiers) a certain amount of bitcoins over time. If a miner completes a certain number of equations over time, the bitcoin blockchain will reward the miner with a block of bitcoin.

Another example of this is with deflationary tokens, where a percentage of the trade is collected and redistributed to the holder. A coin/token collects a small fee and instead of keeping that fee it is distributed back to each holder as a reward for his investment.

The biggest name in the new wave of Tokenomics is a crypto token called Safemoon. This crypto token is a community-driven project launched in early 2021. There are currently over 2.3 million holders according to BSCScan.com and over 1 million holders on various exchanges.

Backed by former US Defense Department staffer, Chief Executive Officer, John Caroni, and Chief Blockchain Officer, Thomas Smith, Safemoon is based on a deflationary token. Holders are rewarded for maintaining tokens in their wallets, and a portion of each trade is sent back to the holders, while the other portion burns out of existence.

This action will help create price stability and work against inflation as with each automatic burn the supply is completely taken out of existence. It also acts as a reward for the wallet and discourages selling.

This is his greatest feature – reflection.

Reflection or static rewards are based on wallet size and trading volume.

  1. big wallet – big reward
  2. Encourages holding for larger rewards and increases price stability over time

Other differentiating factors are adoption and usability.

Safemoon has just completed signing up for beta testing on its wallet and plans to launch the exchange later this year.

Wallet will allow for easy purchases and will include Apple Pay, which means many online stores will accept Safemoon as a form of payment. This is important as it quickly adopts Safemoon as a form of payment via Apple Pay.

The Exchange will include the Token in all coins/tokens on the Platform. This can be done by charging some trading fee and giving some coins back to the user. A trading fee is common on any exchange, but the return of a portion of the coins to the holder is revolutionary for the industry. This is a process known as cryptonomics.

Safemoon has its own blockchain, cold wallet and plans for NFT in the future.

Adoption and utility are driving forces in every aspect of cryptocurrency, and Safemoon will likely capture a substantial portion of this in the near future.

** please pay attention: This article is not financial advice. You should do your own research. These are overviews of what is happening in the cryptocurrency and DeFi worlds and this is an exciting area worth exploring and learning more about.