October 21, 2020

CEX.IO company blog | In pursuit of DeFi tokens - what to expect from this market in the future?

The decentralized finance (DeFi) market continues to gain in popularity. While some use new earning opportunities, others are exploring the prospects for a new industry. Dmitry Volkov, CTO of CEX.IO, expressed his opinion on the prospects for this area.

The decentralized finance market representsis an ecosystem of various financial services. Their main difference from classic services is the absence of a single central authority that manages work processes at its discretion.

A decentralized approach significantly improvesthe level of community trust in such projects. As an example, Uniswap can be cited - the essence of this service is that some people on it can exchange cryptocurrency and pay a commission for it, while other people can provide a possible exchange of cryptocurrency and for this they are rewarded with a commission paid by other users.

Getting rewards is easypeople liked it very much by providing capital as a tool for investment. This can explain the willingness to provide capital to the service from the members of the crypto community.

It added confidence to users thatIt is safe to transfer capital to such a service, since the funds are not stored by a person or a company, but by a program that works clearly according to a specific algorithm. Assets cannot be simply stolen or used for other purposes, because such actions are not provided for by the program code.

In addition, recently Uniswap has a competitor -SushiSwap. His team has created a similar trading platform. The users of the new decentralized exchange were offered increased rewards and some new features. An important difference between SushiSwap and Uniswap is the presence of its own governance token. This made SushiSwap even more decentralized compared to Uniswap.

The SushiSwap team set itself a specificthe goal is to lure investors away from Uniswap by providing them with more income. The next step in the development of the struggle between platforms was the creation of a management token for the Uniswap service, which was called UNI. And already in the first days after its creation, the token doubled in price.

The demand for this token and the community's trust inUniswap were so big that in the early days of UNI they added to the listings of large regulated digital asset exchanges. For example, Coinbase and CEX.IO. At the same time, the procedure for adding a token to these platforms usually requires much more time and effort.

The quick listing of the token on large exchanges confirms the high demand and interest in UNI and the trust of the crypto community in Uniswap, and also reflects the faith of investors in the prospects for the development of the project.

At the same time, it's worth adding what exactly is nowUNI token, by itself, does not generate income. Its price has a very high speculative component due to the hype. This all increases the risks of investing in such a token. But high risk and hype usually do not scare investors with an aggressive risk strategy, since this is offset by the high expected return of such investments.

You can read the full material here.

UNI token is also available on our platform. Follow the link and start trading today.