What is DeFi and how TBTC can impact it

[kudo94]

Decentralized finance (DeFi) has been the latest buzzword in the crypto industry for some time now, and is growing steadily. While many have heard of DeFi, not many know what it entails or how it differs from the traditional financial industry that has been around for over a century.

In traditional finance or centralized finance, people transfer control of their assets to banks and other financial firms so that professional managers can use funds wisely in the markets. Their logic is that they will make higher returns than the average person and therefore those who put their money in will benefit as well.

However, the main problem is that having a centralized system means that the risk is also concentrated in the center. While bankers can be skilled and experienced, they are not perfect and can be wrong as well. An example is the 2008 global financial crisis caused by the US housing bubble.

On the other hand, decentralized finance means that people retain ownership of their assets and have complete autonomy over them, rather than transferring them to a central system.
With this in mind, DeFi solves a fundamental problem associated with the traditional financial industry while increasing its efficiency.

DeFi is financial instruments in the form of services and applications built on the blockchain. The main task of decentralized finance is to become an alternative to the banking sector and replace the traditional technologies of the current financial system with open source protocols. That is, open access to decentralized lending and new investment platforms for a large number of people. And let them receive passive income from crypto assets, as well as save on fees for transfers, loans and deposits.

The argument for decentralized finance (DeFi) has been made even more pressing by allegations of misuse of funds against a centrally controlled cryptocurrency.

Noting the high potential of DeFi, the Keep, Summa and Cross-Chain Group are currently hard at work on their DeFi solution, TBTC, which will take DeFi to the next level.

How will TBTC make Defi better?

The term DeFi is closely related to Ethereum as it is the most popular platform for launching decentralized applications. However, Ethereum's capitalization is $ 45.5 billion. For comparison, the capitalization of bitcoin is $ 217.5 billion. (4.7 times higher)

A product developed by the Keep Summa and the Cross-Chain Group team - tBTC is a fully Bitcoin-backed ERC-20 token pegged to the price of Bitcoin. This token allows you to exchange your BTC for an ERC-20 token in a 1: 1 ratio, provide it as collateral and receive rewards.
Thus, TBTC will bring additional liquidity to the market. More liquidity will allow for more collateral and will have a strong impact on the development of the DeFi industry.
At the same time, bitcoin itself will receive another use case.

The main difference between TBTC and its competitors is true decentralization. This means that any user can issue a TBTC in exchange for their BTC using a network of signers. Signers are selected at random. Blocked BTC have no central custodian holdings.

Steven Becker, president of MakerDAO, once said: “tBTC is brilliant because ultimately it links two major concepts together. [Bitcoin and Ethereum working together] is how all these networks are going to come together to create the on-chain economy.”

Summarizing the above, we can conclude that DeFi technology is very promising and necessary. However, at the moment it has limitations associated with low liquidity. TBTC can solve this problem, which will attract a lot of money to the Defi market and thereby contribute to the strong progress of this area.


Learn more about TBTC:

Website: https://tbtc.network/ [nofollow]

Keep website: https://keep.network/ [nofollow]

Twitter: https://twitter.com/keep_project [nofollow]

Discord: https://discord.com/invite/wYezN7v [nofollow]