Decentralized Finance Now A $430 Million Economic System

Approximately 2.5 million Ether (ETH), currently valued at around $444 million, have been locked in by smart contracts issued on decentralized application (dApp) networks according to data provider Defi Pulse.

MakerDAO, a Santa Cruz, California-based financial services firm that has launched a decentralized autonomous organization (DAO) on the Ethereum blockchain, is now holding around $385.9 million in value (up 6.7% in last 24 hours), which has been issued and managed through its stablecoin, DAI-based smart contracts.

Over $430 Million Locked In Decentralized Finance (DeFI) Apps

Compound, a protocol that allows users to borrow and lend ETH while earning interest, presently has $29.8 million locked in, which represents nearly a 5% increase in the past 24 hours. Meanwhile, Uniswap, a decentralized exchange protocol that allows users to swap (or trade digital assets) ETH and other cryptos through the MetaMask wallet, has nearly $10 million locked into its ecosystem.

Bitcoin’s (BTC) Lightning Network (LN), which is also considered a part of decentralized finance (DeFi), is holding about $5.6 million in value. Other DeFi such as platforms the Dharma protocol, Augur (REP), Kyber, WBTC, Veil, and xDai are also holding value - although their networks appear to still be in the early stages of their development.

In addition to growing in terms of market capitalization, the DeFi economy has introduced new crypto-based lending and trading protocols. While these are in their preliminary stages of development, they can potentially change how financial markets operate in the foreseeable future.

According to MakerDAO’s official website, the DeFi ecosystem brings “economic opportunities for everyone” as it provides “financial services [which were previously] only [available to a] select few ... Maker is an open platform that allows equal access to high quality financial services, including fair credit for everyone.”

As noted in an official overview of MakerDAO and the Dai stablecoin (on Github), Maker serves as a Decentralized Autonomous Organization (DAO) which “manages the Dai Stablecoin System on the Ethereum blockchain.”

The “Ultimate” Decentralized Currency?

The overview further mentions that a decentralized stablecoin is an essential “component” of the ETH-based lending solution as it helps to “unlock the next phase of the digital financial revolution.” The post adds that Maker’s team has designed a stablecoin called Dai, which they consider to be the “ultimate decentralized currency."

Going on to explain the role of MKR token holders in the Maker ecosystem, the overview states that they are “the highest authority in the Maker system.” They also “help govern the system and are benefited when they govern it well, but they also have to foot the bill if things are mismanaged---as a group they need strong social cooperation and a vigilant attitude towards governance.”

Maker's Collateralized Debt Position (CDP) Portal

Maker's "collateralized debt position" (CDP) platform is considered to be the most important aspect of the Dai stablecoin system as it utilizes smart contracts to hold “collateral assets” which serve to “guarantee the value of outstanding Dai.” Maker also “simultaneously serves as a platform” that facilitates “decentralized margin trading” at “lower costs and higher security” than traditional margin trading options.

Moreover, the CDP platform and Dai aim to provide a complete solution for globally accessible DeFi “where everyone, from rural India to Wall Street, can benefit from decentralized finance,” Maker’s official overview states.