With an explosion of video streaming as a result of the COVID-19 pandemic and now around $40 billion locked into decentralized finance protocols, it’s time for decentralized finance and the film industry to meet.
Film financing is a cumbersome and inefficient system. Investors are the first to put their money in but last to see any return. There is no transparency into how funds are being used during production or how profits are allocated after distribution. Investment decisions are generally based on very little data about what people actually want to watch, so the chances of a film’s success are completely unknown until its release. DeFi and blockchain technology can address many of these problems by forming a new realm of decentralized film financing, or DeFiFi.
Related: It’s time for Hollywood to move to blockchain — Yes, you read that right
What is DeFiFi?
Imagine the creation of a decentralized film fund, in which financiers all hold a stake in the success of films that are produced by the platform. Using blockchain technology and decentralization, creators could present their projects to the community, which would vote on what films receive funding. The winning projects would be granted the financing they need from community-managed funds.
The production of the films would happen off-chain, so there would be a need for oversight from members of the DeFiFi community to ensure funds are being used appropriately during production. The completed film could then be distributed on the platform to the built-in audience who voted for it. The accounting process would be completely transparent, as the in-app currency paid to watch the film would flow back into the DeFiFi fund and be distributed to all participating parties per the encoded contract. Since all the transactions would be recorded on the immutable and transparent ledger, there could be no confusion about how profits were being used.
This level of transparency is unheard of in the existing, fragmented processes of financing, production and distribution. In a DeFiFi ecosystem, creators who would otherwise have no access to film financing gain the chance to bring their ideas to life. Regular people who are generally at the whims of whatever Hollywood decides would gain a say in what films are produced. Financiers can make smarter decisions on what films to back based on what real people want to watch.
By harnessing the “wisdom of the crowd,” each film has a built-in audience of supporters who would organically assist in the promotion of the film once released. The unprecedented visibility into the use of funds and distribution of profits could dramatically increase the number of people willing to invest in films, potentially leading to a new golden age for the movie industry.
The golden age of decentralized film
With investing in films made easier and more transparent, more financiers will want to participate. The more capital available for film production, the more films can be produced, supporting more filmmakers with interesting ideas and providing more great content to movie fans around the globe. The dawn of a new era in the decentralized film industry could be upon us.
Other use cases for DeFi and blockchain technology that would help to expand the entertainment ecosystem to further support creators and incorporate fan participation would be digital rights tracking and rewards for engagement. At present, the only recourse for creators whose ideas have been used without credit or payment is to go to court, which is prohibitively expensive for many filmmakers. A digital rights management system would allow artists to register their ideas at any stage of the creative process — i.e., concept, treatment, script, rough cut, final film. Their submission would be recorded on an immutable ledger and timestamped, providing leverage to any creator whose ideas or work has been stolen without compensation.
Related: Circling back to blockchain’s originally intended purpose: Timestamping
Additionally, fans and other ecosystem participants can be rewarded for their participation in building a thriving film community — unlike on social media platforms today, where users are responsible for the billions of dollars made by the platforms but who receive no compensation for their part in these tech giants’ explosive growth.
It’s about time users gain control over their own data, which has become equivalent to currency in the digital realm. In a DeFiFi ecosystem, users could be rewarded for contributing through curating content, promoting posts or performing other tasks essential to the upkeep of the decentralized network, such as running nodes, validating blocks of transactions or identifying bugs in the code.
DeFi is only just getting started
DeFi has contributed immensely to the growth of the entire cryptocurrency economy and will continue to play a pivotal role in drawing users to the space. Many of the most impactful use cases for DeFi have yet to be fully realized, and so the growth we will see in 2021 will well-surpass the surge in 2020. There are opportunities to be leveraged in bringing DeFi to film but also to fundraising, grant issuance, corporate treasuries and hedge fund governance. The possibilities are endless.
Immunefi to bolster DeFi security service with new funds
Decentralized finance (DeFi) security platform Immunefi has announced a $5.5 million fundraise from a group of 11 institutional investors, including Blueprint Forest, Electric Capital, Framework Ventures and Bitscale Capital, in addition to a series of private individuals.
Immunefi will utilize the funds to advance its services in DeFi security, providing asset protection to smart contract protocols, as well as implementing financial incentives to benevolent hackers.
The service is reportedly responsible for protecting more than $50 billion in protocol assets from projects such as Synthetix, Chainlink, SushiSwap and PancakeSwap. It has paid out $7.5 million in bug bounties throughout its history.
According to analytical data from DeFiYield’s “REKT Database,” the DeFi space has experienced malicious hacks totaling more than $1.74 billion throughout its lifespan, a vast proportion of which has been witnessed in the months since July 2021.
The $609-million hack of cross-chain protocol Poly Network in early August 2021 bears the undesirable crown for the industry’s largest-ever hack. However, in welcomely unusual circumstances, Mr. White Hat — as they came to be known — returned all of the available funds, the remaining balance being the $33 million in Tether (USDT) initially frozen.
Over the past year, the prevalence and severity of financial breaches within the DeFi space have established a surging demand for security services such as Immunefi.
Mitchell Amador, founder and CEO of Immunefi, spoke on the importance of offering DeFi protective measures:
“DeFi is unique because vulnerabilities in code represent a possibility of a direct loss of users’ money. Bug bounty programs are open invitations to security researchers to find those vulnerabilities in exchange for a reward, and have proved one of the most effective ways to deal with critical security holes.”
In late September, a $1.05 million bug bounty fee was paid to renowned white hat programmer Alexander Schlindwein in the aftermath of the Belt Finance saga for his instrumental role in preventing a potential $10 million downfall for the protocol. The claim was facilitated through Immunefi’s specialist bounty program.
More recently, white hat hacker Gerhard Wagner pocketed a cool $2 million for diligently advising a solution to a “double-spend” flaw on the Polygon network, preventing a potentially catastrophic $850 million exploit, with the bounty now standing as an industry record.
Immunefi’s Amador also commented on the potential impact a service such as Immunefi could have on the wider technology landscape:
“We believe that by helping launch such programs on Immunefi, we contribute not only to protecting DeFi projects for today, but also to shaping the tech industry for the future.”
Polymarket binary trade under investigation by CFTC
- CFTC is scrutinizing the DeFi platform to ensure they abide by the rules.
- The prediction market platform has made a bold move by hiring the previous CFTC director to tow them in the right direction.
Polymarket, a DeFi platform in New York, has been placed under a microscope by the Commodity Futures Trading Commission (CFTC). The state agency that regulates the United States derivatives trade wants to investigate some irregularities within the DeFi platform.
The regulatory body wants to know whether Polymarket is allowing its clients to deal with binary inappropriately. The agency will also determine if the company will get listed with the regulatory authority.
Polymarket is working under a powerful team
The prediction market platform recently brought in former CFTC enforcement chief James McDonald. He left the role late last year after serving since April 2017 as the enforcement director. After stepping down, he joined Sullivan & Cromwell as a legal firm in New York. His experience will play a big part in the investigations.
A representative from Polymarket noted that they would cooperate with the regulatory authority and abide by the required directives. The company will give all information that the agency needs to make the probe smooth. By doing this, they can provide their customers with the best service.
Leading with diverse markets
Polymarket has facilitated almost 5 billion shares since its establishment. Currently, the company is in the process of raising some funds. According to an anonymous source, the money could see the firm rise to nearly $1 billion valuations.
The prediction platform allows users to predict upcoming events with various unique markets. The customers use the USD Coin stable token while making predictions.
Polymarket does not take positions against its customers and hosts the smart contract interface allowing users to link with the protocol.
At the end of last year, Polymarket got a $4 million funding round led by Polychain Capital. The development involved former Coinbase CTO Balaji Srinivasan, CoinShares CSO Meltem Demirors, and AngelList CEO Naval Ravikant.
Decentralized finance (DeFi) traders argue that smart contract interfaces should use different procedures from centralized exchanges. However, the CEO, Shayne Coplan, has not given light on the concerns.
Other platforms have also begun offering decentralized speculation markets like Polymarket. Augur established a Polygon deployment of its company less than a month ago.
Polymarket always strives to stand out among its competitors by providing diverse markets. The opponents include Augur, DoubleDown Interactive, Stox, and ZenSports.
Polymarket markets include opinions on covid-19 case numbers and CryptoPunks floor prices. Augur is built on Ethereum, and its markets are more concentrated on crypto price predictions and contests.
DeFi Lending: Understanding the ins and outs of decentralized lending
What is DeFi Lending?
Decentralized finance is a blockchain technology that eliminates the use of intermediaries like brokers and decentralized ledgers. This type of finance offers anybody willing to earn interest and profits through trade using digital assets. Most assets used for trading in decentralized finance are a result of a cryptocurrency platform called Ethereum. It is also responsible for most decentralized finance applications.
Instead of intermediaries like banks in traditional finance, Defi is enabled by smart contracts and protocols directed by AI and computer algorithms. While some think it cannot go mainstream since some traders do not accept crypto coins and tokens due to the fear of volatility, statistics do not support the same. According to Defi Pulse, there is 83.05 Billion USD locked in DeFi today. DeFi has also brought about a significant improvement to the blockchain.
How DeFi Lending works
DeFi lending provides a chance for trade between two parties and can only involve a trusted third party if the APIs allow. With the use of this criterion of finance and smart contracts, P2P ending is possible. A crypto investor can enlist his crypto coins for lending on the crypto platform and lend out to another investor by use of protocols. This type of lending is becoming a trend because of how trustless and transparent it is.
A borrower is supposed to create an account on the cryptocurrency platform then ensure that he has an active wallet. He is then supposed to open smart contracts that are supposed to guide how the lending is expected to happen.
Defi lending allows the lender to earn interest from the loans. One can borrow money at a specific interest rate. It is also helpful as it serves financial services while giving back to the cryptocurrency community. It is beneficial to both lenders and borrowers because borrowers can access crypto loans quickly, and the lender earns a yield from investments instead of watching wealth sit in one’s wallet. Lenders are like investors who deposit their money in lending pools like banks in centralized finance.
Various ways can be used for an investor to access their interest and from borrowers. Moreover, different liquidity pools have different borrowing approaches, so an investor needs to research the pools.
Borrowers are expected to offer something of equal or more value compared to the loan amount provided. This is used as collateral during loan payments. Depending on the borrower, a wide variety of crypto tokens can be offered as collateral for the loan.
Benefits of DeFi lending
Decentralized finance is advantageous in different ways. These are;
- Unlike traditional banks, the processing speed of crypto coins is fast
- Decentralized finance complies with the law of the land
- There is an availability of helpful analytics that a borrower can use to tell the best lender and vice versa
- DeFi is permissionless
- There is transparency in their services
As DeFi targets to go mainstream, it is advisable to try its services like lending to compare it with the usual way of things; it might just be your niche!