During this first wave of decentralized corporate and financial services, users were more likely to share their money. This is very similar to how decentralized exchanges work, in the sense that comfort in DeFi is more important than privacy and security. The fact that some platforms offer a high annual rate does not mean that someone should relinquish control of their money.

Given that DeFi is designed with blockchain technology in mind, there is no need for intermediaries, intermediaries or commissions. Unfortunately, all these aspects are present in many solutions today. Unfortunately, users have to pay to make a deposit and withdraw money afterwards. Concepts like these will ultimately lead to the demise of DeFi if developers don’t get hold of it soon.

Uniswap, currently the fourth largest Ethereum DeFi project after closing by total value, shows how DeFi works apart from a nudge. The DEX never controls users’ funds – even when liquidity is added to trading pairs. Its downside is that it is holding back gas tax increases for Ethereum. Uniswap is very easy to use, but paying more than $ 20 for moving and collecting money is unacceptable.

Finally, the ultimate goal of DeFi is to allow cryptocurrency enthusiasts to generate passive income without contracts or platforms that care about money. This option is already being considered in several projects, but there is room for further improvement.

Why DeFi Needs Peer-to-Peer Solutions
In the current environment, the decentralized economy interface relies on smart contracts, which may need external verification. Unfortunately, this has led to an increase in the number of scammers, “blankets” and projects that have been subjected to other violations or attacks. This makes the entire industry look weak and unprofessional.

A November 2020 CipherTrace report confirms that half of the cryptocurrency hacks in 2020 were caused by insecure DeFi protocols or scams – an amazing event – but people are still investing in unknown projects. Although stock markets are losing more money due to decentralized financial projects, these statistics need to be improved quickly.

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The ability to earn up to 12% negative interest on existing cryptocurrencies is even more attractive, especially when there are no blocking periods where you can withdraw money from the solution at any time. It provides a smarter, safer and more passive approach to using cryptocurrencies. While returns up to 12% may not be high compared to returns up to 1000%, they involve less risk and less confidence. I know where to put the money.

Most importantly, such a solution is being implemented on a peer-to-peer marketplace. Users wishing to post credit offers can choose from several options without requiring broker approval. In addition to the insurance platform approach and hedge fund creation, and in-depth audits, the “second generation” DeFi protocol offers many benefits. Moreover, supporting more digital assets should become the norm in decentralized finance.

Modifies LP and original combo
A popular trend in the current DeFi environment is the introduction of a liquidity or liquidity protocol token. This concept has been spread through Uniswap and other automated market maker platforms. The main disadvantage is that users are different from the two tokens and their balance to provide liquidity.

For example, if you want to offer Uniswap liquidity, you will need Ether (ETH) and Tether (USDT) or Dai and MKR, etc. For newbies, this poses a major hurdle to overcome. This requirement of having the “right assets” to participate in growing LP will not last long. A new solution needs to be found, and building the LP will make a huge difference.

The LP pool ensures that users only need to have one “asset” out of a liquidity pair to receive liquidity. A smart contract can be associated with other users who have a corresponding resource. Creating a “pool” to fit these users will greatly increase DeFi’s involvement and reduce the risk of liquidity provision.

An added bonus is that LP Grouping gives users the right to earn compound interest on their initial assets and earn platform tokens. This is a weird concept that will make users more “loyal” to the platform they want. This is definitely an option worth exploring for anyone serious about taking DeFi to the next step. I hope there will be more LP merging initiatives in the coming months – or concepts that could get better at that.

Source: CoinTelegraph