Are you interested in entering the world of decentralized finance but feeling a bit overwhelmed? Let’s take it step by step and demystify what decentralized finance (DeFi) is and why it’s important.
On July 22nd of 2020, the leading DeFi protocol, Maker, completed its most successful governance vote to date. Things got interesting as Maker looked to maximize the value of the Maker’s Dai stablecoin by increasing the debt ceiling and activating a reward system for lenders.
The results of the vote showed a unanimous decision to increase the debt ceiling to $3 billion, or three times its current $1 billion level. This new debt capacity is sure to benefit those seeking collateral for their Dai borrowings lended by The Maker Protocol. In addition, the reward system for lenders is a great incentive for those to lend their holdings and become part of the Maker Protocol.
The success of this governance vote brings positive reinforcement for DeFi which has seen tremendous growth from 2017-2020. Specifically, the total value locked (TVL) has grown from around $670 million in October 2019 to $6 billion in June 2020. This indicates that more and more people are believing in the potential of DeFi and the blockchain technology overall.
Decentralized finance has received acquisition from investors and blockchain companies due to the potential immutability, speed, and overall trust-minimizing features offered. Decentralized finance combines traditional asset management and lending services with the security and trustlessness of blockchain technology. This provides multiple advantages to distributed applications due to the level of trust and decentralization present, allowing users in the DeFi space to operate in a trust minimized environment.
Overall, Maker’s successful governance vote is a major milestone in the success of DeFi and shows that the project is here to stay. Decentralized Finance has grown quickly and due to all the advantages it offers, we can expect to see DeFi catapult to the forefront of the blockchain industry in the coming years. For more updates on DeFi news and trends, follow us today!