DeFi Trend.

Decentralized Finance - is an ecosystem of decentralized applications (DApps), built on distributed networks without any centralized governing body. DApps are aimed to provide financial services.

This ecosystem is created to establish new financial relationships in the upcoming decentralized space. It allows you to exclude unnecessary intermediaries, to speed up all the processes, and to bring transparency to all levels.

It is worth noting that today there are still people with no access to loans from banks. And even more, there are regions (some African countries as an example) where people have no bank accounts, also known as the unbanked. 

Apart from that, the disadvantages of the traditional banking system include the fact that these organizations are managed by people and are therefore very susceptible to human factors.

Decentralized Finance solves several problems of a centralized banking system at once: lowering fees for transfers and loans, provides accessibility, ushering decentralization, and transparency. By the way, transparency is one of the very important elements in the financial industry. Since the 2008 crisis, when the rating agencies falsely assigned the highest AAA rank to high-risk mortgage-backed securities,  transparency and stricter regulations became more important.

DeFi protocols are written as lines of code - you cannot cheat the code as it treats all participants equally without discrimination. The code runs exactly as it is programmed, and any flaws quickly become apparent as they are open to the public.

However, it should be noted that at the moment no fully decentralized DeFi projects exist. Only partially decentralized ones, such examples are  Compound and MakerDAO projects.

DeFi as a term was mentioned first over two years ago. Already in July 2019, over $ 550 million was invested inclusively in this niche.

Before the market collapsed in March 2020, funds amounted to more than  $ 1.2 billion were locked in DeFi projects. Today these numbers are higher.

Decentralized finance is one of the most promising directions for development in the cryptocurrency market and the blockchain industry in general. But at the moment, the constructive properties of decentralized applications are often used to their detriment. After all, there are both good and bad players in the market.

The ones acting as a positive power use the transparency of smart contracts for auditing, while those from the other side can find errors and use them to hack. With this, many may have financial losses, which probably will not be covered by insurance payments.

Another small issue is the bandwidth of the blockchain on which the decentralized application is running on. Now, most of these applications use the Ethereum blockchain, less often the Tron chain and Binance Chain. Ethereum doesn't have the very best scalability. And as their chain is experiencing a high load of the network, there is often an unreasonable high commission for transactions. 

In 2020, Yield Farming became another booster for DeFi. It all started by offering users a small fraction of the transaction fee to inject liquidity into a specific application (like Uniswap or Balancer). However, the most profitable and well-known herd method is to receive a project token in return.

Rules of classical investment are the same in crypto markets. When there is a high potential profit, the risk is also high. So this investment option is not suited for everyone, it depends on your set of mind if you are willing to take high risks for a big win. In DeFi at the early stages of farming, the potential reward is sometimes measured in hundreds of percent, and super high risk. 

At present DeFi market is in the correction stage. Many coins decreased in value. Those investing at the highest hype are in minus. 

However, the DeFi keeps growing despite the failure of many projects as well as scams in this niche. 

The potential of DeFi growth attracts many developers and entrepreneurs. They start projects from scratch. And some even copy the code of their predecessors, often this code has got lots of bugs and errors, which are later getting used by hackers.

To resume, we want to highlight that there are so many new projects and products evolving in the crypto world every day.

We, at Credits, keep watching the markets and trends. Of course, we are aware of the most booming directions in crypto happening at the moment. 

DeFi, just as FinTech and Virtual banking is one of the important niches in the digital transformation of the financial industry.  

As always, in the early stages of growth and new and innovative industries, the sector encounters a lot of hype and not very honest players. 

We continue exploring and researching DeFi ideas and see if any of them can be integrated into our products. But this is probably for a very far future when DeFi hype goes down, and it will become clear how many real users are there. As for our product development, the main interest is usability and the potential number of clients for the service. Stepping in later sometimes works better. We take our time to improve our positions in other fields meanwhile.