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DeFi helped propel Ethereum and it can continue to grow

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Vitalik Buterin thinks Ethereum developers should start focusing on other non-financial blockchain applications rather than just ape, yield farming and all those DeFi- related stuff 

So, beyond having received half the supply of SHIB, the meme coin that is now able to rival other flagship DEXs such as Uniswap, PlasmaSwap or even SushiSwap, Vitalik says that: 

“Being defined by DeFi is better than being defined by nothing. But we need to go further ”.

Certainly, Ethereum is fueling many other perceivable use cases of blockchain technology towards supply chains , identity verification, and even decentralized social media.

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So while Vitalik, a universal genius, can quickly get bored with Degens, orangutans, and monkeys as he relates to DeFi’s fiery natives using esoteric language, Ethereum has actually seen tremendous growth over the past year thanks to DeFi. 

For example, the creation of Ethereum wallets increased from 50.2 million addresses in June last year to 119 million as of July 21, 2021 . This would represent around 60% growth from one year to the next. 

While this may not represent total network utilization, active ETH addresses, which DeFi users interact with protocols hint at, hit their all-time high for a single day at 678,000 in May of this year. 

To date, there are approximately 522,000 active ETH addresses. A historical look at active ETH addresses shows that even the 2017 ICO craze, which culminated before collapsing in 2018, did not see Ethereum’s daily use at its current level. Active ETH addresses during the ICO craze peaked at 574,522 in January. 

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Ethereum in the DeFi sector

So beyond the noise of the upcoming high-yield farming protocol, the Ethereum network has actually grown. Furthermore, even though it appears that challenger networks like Binance Smart Chain, Avalanche, Polkadot, or even Solana are eating Ethereum’s market dominance as the largest smart contract network, Ethereum still exhibits an iron network effect. For example, in an effort to connect their community to some of the highly liquid protocols on Ethereum, these challenger chains are EVM compatible or employ cross-chain bridges. This in itself is a network effect that no one can take away from Ethereum, and DeFi’s constant developments accentuate this.

So one element Vitalik has his eye on has been the perennial gas problem that never seems to go away whenever network load skyrockets making the Ethereum network nearly unusable for DeFi users. Understandably, many of these are retail investors and it deserves the utmost consideration if Ethereum doesn’t want to become a whale-only arena. Vitalik says

“Degens can pay, monkeys can pay, orangutans can pay,” Buterin said, using niche DeFi jargon referring to rich and obsessive DeFi operators. But a holistic Ethereum ecosystem won’t work, he said, if gas tariffs paralyze the average user. “

Recent advances in Layer 2 are making that news obsolete already. For example, PlasmaSwap, which is currently the most advanced DEX in the Polygon chain right now facilitates swaps and other regular transactions for just $ 0.005. I wouldn’t consider it expensive at all. This means that DeFi users can benefit from a suite of advanced trading tools using PlasmaSwap. For example Limit Order for compact control over their trading activities and the use of stop-loss on a DEX and other extended portfolio management tools. DEX users enjoy these value-added services by trading on PlasmaSwap, as well as cheaper and faster execution of trades. Thanks to Polygon.

In fact, other areas beyond DeFi, such as decentralized social media, identity verification and attestation, and retroactive funding of public goods are worthy of consideration by the innovators who power the use of the network. However, I think it shouldn’t be at DeFi’s expense. In short , why take your foot away from the accelerator of DeFi, which is currently giving the network the greatest growth, to address other areas since these actions are not mutually exclusive?

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Immunefi to bolster DeFi security service with new funds

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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.

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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.

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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.

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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.”

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Polymarket binary trade under investigation by CFTC

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  • 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.

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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.

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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.

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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.

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DeFi Lending: Understanding the ins and outs of decentralized lending

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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.

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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. 

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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! 

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