What is Decentralized Finance (DeFi)
Decentralized Finance (DeFi) is a collective term for financial products and services that transform old financial products into trustless, transparent protocols that run without intermediaries. It uses cryptocurrency and blockchain technology to manage financial transactions.
Decentralized Finance is the future, and its growth shows us why the entire market cap of the industry has now surpassed $100 Billion and continues to grow with increased usage. The following real-time chart is from a TradingView page that tracks the combined market cap of all DeFi tokens:
The DeFi system is highly efficient compared to traditional financial methods, and it's open to everyone with an internet connection. It gives you exposure to global markets and alternatives to your local currency or banking options. With DeFi, the markets are always open, and there are no centralized authorities who can block payments or deny you access to anything.
Many DeFi Services are being developed on the Internet Computer Ecosystem, and the growth of the DFINITY ecosystem has not gone unnoticed by DeFi projects. Today we will focus our attention on ICPSwap, InfinitySwap, and Dfinance, all of which show a lot of activity since they started in the DFINITY network.
ICPSwap serves as the hub connecting users and developers, providing full-stack services in terms of finance, market, and DAO to benefit the entire DFINITY ecosystem:
- Financial Services: Custom token minting, Custom pools, and Market-making with optional ranges + limit orders.
- Market Services: Token list, Ads, Chat and Community creation.
- Innovative Extension: The Chainkey Cross-chain functions for the user-inflow generation and transaction plus innovation on the NFT.
This platform includes several functions such as Chat, Token List, Ads, DAO, and some social media features. Openchat and DSCVR APIs are integrated with swap. In essence, social- media and DeFi work together to make the perfect combination.
Access Demo version:
ICPSwap has been very well received by the community, as evidenced by the number of participants participating in the demo version since its launch.
ICPSwap is bringing a new mechanism for Liquidity Pools, and it boasts about its new innovative NFT function under development. The future roadmap consists of DAO Governance, Liquidity mining, testing, and exploring cross-chain provision of financial and market services.
More detailed information can be found in their White Paper.
InfinitySwap is a platform where you can create, stake, and swap DFINITY tokens. It wants to swap one token for another, and the stake of tokens is easy and accessible. The system has three different subsystems:
- A new token standard based on ERC20 enables transfers between DFINITY addresses.
- Liquidity pools and factories enable users to create new pools and generate income from tokens deposited into the pools.
- A bridge between Ethereum and DFINITY will enable markets on DFINITY to stake and swap.
New developments will be announced soon. Download the mobile app (I personally tested it on Android and it works really well) at the following link. You can log in with your Internet Identity.
Access Demo version: app.infinityswap.one
InfinitySwap is essentially very similar to UniSwap, which is well known in the Ethereum ecosystem. Still, it has more ambitions of using the infrastructure space to build a more elaborate set of financial primitives.
Find out all the details in the following podcast in which Arthur Falls interviews Alessandro and Max of InfinitySwap on his Internet Computer Weekly show.
InfinitySwap aims to provide an AMM (Automated Market Maker) to establish liquidity pools for DeFi products and fundraising on the Internet Computer. AMM enables unstoppable, automated, and decentralized trading using algorithms to price assets in liquidity pools. Traditional exchanges require buyers, sellers, and a central reserve of assets. In contrast, AMM exchanges crowdsource liquidity and use bots called smart contracts to execute trades.
Dfinance is building the open financial services infrastructure for the Internet Computer. In its roadmap until the end of this year, Dfinance focuses on three main objectives:
- Token standard: Crypto wallets need a unified token interface to manage different tokens and developers need a token canister template to issue their own tokens for their projects. The token standard is the base layer of DeFi, so this is our first focus.
- DToken: is a token issuance app based on the token template that Dfinance has built so that ordinary users can issue their own tokens with their user-friendly web interface without any coding. In addition, they will provide token management functionalities such as minting new tokens, burning tokens, and transferring tokens. Users can also top up their token canister with our web interface.
- DSwap: is a decentralized exchange that employs the automated market maker (AMM) mechanism. Liquidity providers earn swap fees, and traders pay a 0.3% fee for each swap. Ordinary users can swap their tokens in DSwap. External developers can build their own applications(such as liquidity farming apps) based on the APIs we provide.
Access Demo version: https://app.dfinance.ai
You can send and receive ICP and top-up canisters via their web interface. Check out many more features in their application (link above) that have been deployed for testing (you can log in with your Internet Identity and your Plug wallet).
DFinance will expand to synthetic assets, derivatives, and other new innovative decentralized financial application scenarios.
For additional details, see "Dfinance Review”.
Although all three projects pursue the same objectives as any DeFi project, the particularities of each project make them unique. ICPSwap will include a large set of services, such as chat and social media integration. Infinityswap will mainly provide liquidity pools. In addition, they will have a feature to trade staked ICP, so the ones you locked on NNS can be swapped using Chain Key Technology in their liquidity pool. Last but not least, Dfinance will start from the very bottom of the whole DeFi ecosystem (token standard) and add the DToken and DSwap services.
- Disclaimer: The views and opinions expressed on this website are solely those of the original author and other contributors. These views and opinions do not necessarily represent those of the Dfinity Community staff and/or any/all contributors to this site.