Spherium

<p>It’s slightly over a decade since the release of the Bitcoin whitepaper and the introduction of the terms ‘cryptocurrency and blockchain’. With so many developments and wide adoption, it now looks like the crypto industry has been around for much longer.</p><p>Decentralization, as an extension of crypto, exhibits traits of the traditional financial ecosystem, however, in a more sophisticated manner.</p><p>Decentralized Finance, written in short as &#34;DeFi&#34;, encapsulates all traits of the financial system without the interference of intermediaries such as banks, insurance brokers, and clearing agents. DeFi is powered by smart contracts and aims to provide all services offered by traditional financial institutions (which operate in a centralized manner).</p><p>It is, therefore, safe to say DeFi has the potential to cause distortion to traditional financial institutions (TradFi), both now and in the future.</p><p>This is evident in the mass adoption of DeFi protocols we are now seeing. Statistics from DeFi Pulse show that tokens worth over $62.08 billion are locked in DeFi protocols.</p><p>This piece analyzes some aspects of TradFi that is being remodelled by DeFi.</p><h2 id="header-0">How DeFi is Remodeling TradFi</h2><p>DeFi is changing several aspects of TradFi in a positive way. These include centralization, privacy, yields, value transfers, savings and borrowings.</p><h3 id="strong-centralization-strong"><strong>Centralization</strong></h3><p>For crypto lovers, centralization is a turn-off. In TradFi, centralization allows a group of individuals to monitor important activities like planning, decision making, risk assessment, etc. This gives certain individuals power to navigate the financial market in their favour — from interest rates to inflation rates and even capital control.</p><p>This explains why central banks control the economy of their countries. With increased knowledge about blockchain, people now appreciate and use crypto-based assets as an alternative to fiat currencies.</p><p>Even though little to no hitches may be encountered, DeFi is proof that an effective TradFi without centralization is possible.</p><h3 id="privacy">Privacy</h3><p>Privacy is also a major limitation of TradFi. And issues with security and violation of user privacy boil down to centralization.</p><p>Many countries that kick against cryptocurrencies may cite issues like the fight against terrorism, money laundering, or drug trafficking. By using central authorities to track money, user privacy is likely to be violated.</p><p>During the sale of financial products like loans, or mortgages, TradFis may collect multiple customer data that necessarily doesn’t link them to money laundering or terrorism. This data may find its way to the public space.</p><p>This is because they are stored on servers whose security architecture may not be totally guaranteed. The result may be malware or ransomware.</p><p>Because DeFi leveraging blockchain technology, user privacy and protection is guaranteed.</p><h3 id="yield">Yield</h3><p>Investors are in a constant search for yield. For many years, central bank policies have not been so favourable to bonds and money markets. And the result is minimal yield and accelerated risks.</p><p>The great news is that crypto and DeFi now serve as alternatives for maximum yield. DeFi has consistently provided positive yields, even as high as 12%.</p><p>DeFi has proved to be superior to TradFi just by its yield percentage on several DeFi platforms. The risks are also minimal because DeFi protocols are pegged to stablecoins which cushions against volatility.</p><h3 id="value-exchange">Value Exchange</h3><p>With blockchain technology, centralized exchanges and accompanying wallets have been successful. Users get to swap crypto for fiats, as well as store and transfer crypto.</p><p>Decades ago, transfer of funds between unknown parties was impossible, except through TradFis. But the birth of crypto, blockchain and DeFi has made it possible. The positive side is transactions are processed at a faster rate and lower fees.</p><h2 id="header-1">How Spherium Finance is Shaping the System</h2><p>Spherium Finance, as a major operator in the DeFi space, gives users access to a world of unlimited DeFi products, with an opportunity to stake, borrow and lend tokens.</p><p>Being built on layer 2 solutions, Spherium transactions are relatively swift and cheaper. Spherium wallet users can utilize the automated and money marketplace in the wallet to find borrows and lenders of tokens. It can also calculate interest on crypto investment.</p><h3 id="bottomline">Bottomline</h3><ul><li>With the real working applications of DeFi, capital investments worth billions of dollars have been made.</li><li>DeFi has also proved that financial systems can operate in the absence of intermediaries.</li><li>The DeFi market has experienced several layers of maturity, with more development cycles underway, it can be comfortably said that DeFi will be around for a long time.</li></ul>

Decentralized Finance is Remodeling Traditional Financial Institutions

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Spherium Finance

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