“DeFi does show the opportunity which blockchain offers to finance. We believe that one of the best differences against being dis-intermediated by DeFi would be mainstream finance grasping these opportunities,” mentioned the Bank of America in a recent report, adding that they see a true radical change to mainstream capital markets.
Initiatives and projects are thriving, offering more and more financial services in a decentralized way, with Decentralized Exchanges or DEXs, peer-to-peer lending, stablecoins, prediction markets, and yield farming being the most popular DeFi products. These products are normally offered through platforms that have support for Ethereum ERC20 or any other blockchain that enable smart contracts. They do not only remove middle-man issues but increase flexibility and bring breakthrough returns to the investors.
Companies are exploring DeFi from different perspectives and solutions. For example, Chainlink is one of the most well known decentralized oracle network. Their technology feeds real-world data to smart contracts on the blockchain and thus serves as a link between the unprecedented amount of information going back and forth between crypto Decentralized Applications or DApps.
Another project worth mentioning is the Decentralized Exchange Uniswap. One of the leading initiatives in the DEXs market, their solution employs an Automated Market Maker system (AMM) to ensure that there is sufficient liquidity for the ERC20 tokens traded on its site. Uniswap has attracted a huge user base as per its crypto-asset solutions, which provides extra security, control over private keys and low fees.
And yet, these two projects are focused on a niche target, still a long way from mass adoption. LocalTrade, one of the biggest crypto exchanges by 24h volume, is trying to bring together the traditional crypto market and all the opportunities that DeFi can offer.
LocalTrade’s multiple solutions, written down in their white paper and in the company’s road map, is precisely to tackle all those challenges and simplify, literally, the entry point of investors to the DeFi sphere.
They have set out on one mission: “to remove the investment barriers by creating a simple & customized investment tool with the best CeFi & DeFi products in one ecosystem.” Because, indeed, there are some challenges.
Tackling the DeFi challenges
There are several challenges to account for for newcomers. As with any software-based solution, DeFi services always come with security risks. In fact, smart contracts are the most considerable DeFi’s risk since an attacker may use smart contract weaknesses to steal user money.
DeFi solutions work in a regulatory grey zone. You can find anything from cash instruments to derivative assets in DeFi, but since they are blockchain-based, none of these tools are fully legal in most jurisdictions; this creates additional barriers to entry.
DeFi’s global adoption is being slowed by inadequate user interfaces, a lack of customer service, and insufficient data. A lack of simple-to-use and simple-to-understand DeFi apps fosters mistrust and reduces retail market players’ rapid adoption.
The Entry Point hub: LocalTrade’s DeFi Lab
DeFi initiatives face multiple challenges but none as important as answering the question: how to attract mainstream investors into the space? There are various solutions in the market, though it is worth mentioning LocalTrade’s DeFi Lab as a holistic hub from which to build an entire DeFi ecosystem.
This DeFi Lab is one of the company’s solutions to make it accessible for all retail investors. In fact, the company has developed the tool specifically to cater to the mainstream crowd, making it easier for them to enter the market. DeFi Lab represents a set of distinctive digital investment tools, categorized by their risk basis.
“Our mission is to provide easy access to the most profitable and secure DeFi & CeFi financial products using existing CEX payment infrastructure and capacity. Combining CEX expertise and DeFi opportunities, we will run a DeFi Lab for a new generation of independent crypto investors looking for trustworthy tools to help them leverage market opportunities within an exponentially growing industry,” commented the company.
The DeFi lab is just the beginning for LocalTrade. It is the hub where they will launch a series of in-house financial services that will be available according to their ambitious roadmap, including a NeoBroker Smart-fund, Yield Farming Protocol, support fo Token Sale/ ICO, a DeFi wallet linked to the CeFi part of the company, TT Staking & Farming, a Launchpad and plans for the creation of a LocalTrade DEX.
The operability between the CeFi part of the company and the DeFi ecosystem will be based on a solution the company calls the Bridge. This is a protocol that will effectively bridge the CeFi exchange and the DeFi products of the company hosted in the DeFi Lab. This protocol, decentralized and trustless, will enable exchange of assets between different blockchains.
“Powered by LocalTrade DEX pools, the bridge provides swift execution and offers an additional incentive mechanism for users. LocalTrade Bridge will be integrated into the LocalTrade DeFi wallet, enabling instant cross-chain swaps from within the mobile app, with no limits on exchange volume,” as the company describes it.
The buzz around DeFi is growing exponentially, and not only by hard-core crypto investors, but by media outlets and traditional banks alike. In fact, the Bank of America states that DeFi is “potentially more disruptive than Bitcoin”. As the second biggest bank in the US sees it, DeFi is a radical change to traditional capital markets that can eventually disrupt the current system. But there are still some costly entry points to solve, including a mix of distrust among investors and highly complex products that drag its mainstream adoption back.
Building trust and supporting investors entering the DeFi space is a challenge that crypto and blockchain-based companies are working hard to solve. From Uniswap and their leading DEX exchange, through decentralized oracle network Chainlink, to CeFi/DeFi initiative LocalTrade, there are many pioneers opening the door to decentralized finance.