The prices of cryptocurrencies can make huge leaps of 10% daily, to prevent this volatility, stable crypto currencies based on fiat assets have emerged. For example, BiLira (TRYB) is a stable crypto currency indexed to Turkish Lira and there is always 1 Turkish Lira behind 1 TRYB. In general, stable cryptocurrencies make DeFi protocols and DAPPs more accessible by providing a cryptocurrency away from volatility.
Decentralized borrowing and lending
In our daily life, no matter how good our financial situation is, borrowing is always an exhausting process and full of documents that we sign without reading pages. Decentralized debt exchange has made the debt exchange fit into our phone within minutes by tying users’ own assets and cryptocurrencies as collateral.
The biggest use of crypto coins is payment exchange between two parties. With DeFi, payment methods were taken to another dimension with different innovations and improvements. With DeFi protocols, hourly, daily, weekly or monthly payments can be made transparently and securely thanks to smart contracts.
Although cryptocurrencies are considered a decentralized system, it is the largest crypto exchanges center in the world. In addition to conflicting with DeFi’s origin, this centrality puts users’ crypto assets at risk. However, thanks to DEXs such as Uniswap that do not use an intermediary, users have full control during the exchange of our crypto assets.
Fund management is the process of managing cash flow to maintain control of the return on your investments. There are two main types of fund management: active and passive fund management. Active fund management has a management team that makes investment decisions to generate returns above a certain index such as the S&P 500. The passive fund does not have a management team, but is designed to mimic the performance of a particular benchmark as closely as possible.
Some projects in DeFi protocols have begun to allow active and passive fund management to be done in a decentralized manner. The transparency of decentralized finance makes it easy for users to monitor how their funds are managed and understand the cost they will pay.
Insurance is a risk management strategy where a person receives financial protection or reimbursement from an insurance company for losses in the event of an unfortunate event. It is common for individuals to purchase car, home, health and life insurance.
All cryptocurrencies locked in smart contracts are potentially vulnerable to smart contract exploits. While most projects have audited the code, we never know if smart contracts are truly secure, and there is always the possibility of a hack that could result in a loss. Especially if DeFi protocols contain large amounts of funds, the need to purchase insurance decentralized due to risks is a very important point.