Steem And Decentralized Finance

The impact of cryptocurrency, blockchain, and other digital assets is just starting to be felt. Since we are in the early stages, we are seeing an industry that is evolving in a rapid manner. What was in a year ago is now passe with something else taking its place.

Back in 2017, ICOs were the craze. After the bear market set in, along with the SEC starting to hunt down projects that raised money, the pace of offerings dwindled considerably.

The next phase in the process was IEOs, where the offerings were done on exchanges, thus providing more validity to the projects (at least in theory).

Next up will be security tokens which Wall Street institutions are gearing up for.

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Today, the buzz is about Decentralized Finance. Wall Street makes a lot of money by acting as a third party verification service. The rules are established in such a way that protects the interests of the banks while excluding everyone else. This makes financial offerings a lot more expensive than they need to be.

Decentralization is viewed as a way of eliminating a great deal of the cost. Also, because of blockchain, it is a more trustworthy system compared to the banker run one where fraud is commonplace.

Thus, we are seeing an entire industry popping up, seemingly, overnight.

When looking at different blockchains, I think it important to keep in mind how each is progressing in this area. The world of finance is enormous, entering the trillions of dollars a year in revenue. Thus, disrupting an industry of this nature can provide an incredible windfall for those projects focusing upon it.

Of late, we see a lot of ideas coming into being. What is interesting is the many announcements that come out are often nothing new for those who are on Steem. Ironically, we see many aspects that are being used on Steem each day.

Here is a list of some of the major areas of DeFi that is being focused upon.

https://defiprime.com/dao

Obviously, we are not seeing everything on this list on Steem. That said, there are a few areas where we some projects are starting to appear.

Marketplaces

This is an area where Steem is lagging a bit yet we do see a couple that popped up. @actifit created a marketplace a little over a month ago that offers fitness consultation. I know there are efforts being made to expand the offerings on that site to make it a full blown fitness store.

We also have @steembay which takes the model from Ebay, enabling peer-to-peer selling. Again, this is something that is still in its infancy compared to what else is out there.

Exchanges

Here is an area where Steem made a lot of progress. Fortunately, this is only going to keep growing.

To start, there is the internal exchange. At this time, we see only STEEM and SBD as the tokens traded on there. This is going to change a great deal when SMTs are released. Each token using that protocol will be listed on there and paired with STEEM.

The major progress this year came with the development of Steem-Engine. This layer two solution has a solid foundation to be a major piece in the DeFi game. We already see token creation through the use of the smart contract platform. This is only the first phase of what is going to take place on there.

Staking

It appears the industry is excited about this development. Many projects made headlines recently by offering returns for staking cryptocurrency.

On Steem, this is nothing new. The powering up process enabled one a variety of ways to gain a return as opposed to having one's coins just sitting in a wallet. This idea was mirrored by Steem-Engine, providing the same opportunity to holders of those tokens.

Derivatives

Here we have the crux of the Wall Street market. This is absolutely huge. Estimates are that the derivative market is worth somewhere in the neighborhood of $1 quadrillion. To put it in perspective, this is about 5 times the estimated worth of all the real estate in the world.

@spinvest is a project that I liked from the start. At present, it is the closest thing to a derivative that we see. The tokens in this club represent a value that is derived by the backing of Steem Power and other assets that were purchased.

Steemp, which is the peg on Steem-Engine, can also be considered a derivative.

Lending

Once again, this is nothing new on the Steem blockchain. While we are not seeing mortgages financed on Steem, there is a form of lending that takes place.

@dlease is the main provider of this. Steem Power is leased out to people who want to use it for a certain period of time. This helps their account by having access to the voting power that comes from the SP. Applications are finding it helpful to support their users by going this route.

Delegation is often a form of lending. It is quite common for one to delegate some SP to an application. In return, one receives payouts in the native token for that application.

Analytics

This is another area where Steem is seeing some green sprouts. Some of the applications such as Steempeak provide charts and graphs which enable people to analyze what is going on with particular accounts. The same is true for Steemdb which provides preliminary data analysis.

Many individuals provide different scripts to analyze what is taking place on the blockchain. In fact, we have a number of people who offer out analytical posts themselves.

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Much of what we see is in the early stages. However, this is true for the entire industry so Steem is not lagging in this area.

What is interesting is a lot of the list will be touched upon by Steem-Engine. For example, asset tokenization is something that already took place on there in a private sale. When STOs are finally offered on there, we will see many tokens created that are digital representations of physical assets.

We are also going to see KYC. While this is not something that many true crypto people favor, it is part of the hybrid world we are going to be in for a while. We cannot escape the reach of organizations such as the SEC. Thus, while Wall Street still has all of the power, it is part of the game that needs to be played. Over time, as decentalized exchanges become the norm, I foresee this disappearing.

I would also not be surprised to see a payment system implemented into Steem-Engine. A piece of middleware that takes all the tokens from one's wallet and enables direct payment makes a lot of sense. This becomes vitally important for those projects that require recurring payments to token holders.

Each day, more tokens are issued into the wallets of people on Steem. As this keeps expanding, we are going to see an entire industry crop up around it. There is a built in market with people looking for options. This presents an opportunity for who are willing to fill the void.

We can see the foundation being laid. Steem is already a decentralized finance system albeit with limited offerings at this time. I do not believe that will be the case a year or two from now. The options that people have are only going to keep growing.

Once the tools are in place, the Steem economy can grow. Moving wealth away from Wall Street and the banking system is something that needs to happen.

For many, the process is starting on Steem.

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