DeFi on Concordium’s Smart Contract environment supports all current DeFi activities. The Concordium ecosystem features basic building blocks for DeFi, such as wrapped CCD tokens, NFT marketplaces, an Ethereum token bridge, and a decentralized exchange (ConcorDEX).
What is Defi?
Decentralized Finance (DeFi) is an umbrella term, covering all activities related to financial transactions on a decentralised network. Such activities range from simple exchange services, for example changing Bitcoin (BTC) or Ethereum (ETH) into Concordium (CCD), over-prediction products, and online betting to more advanced services, such as lending and mortgaging. As an overview, the following areas are currently covered by the term, but the list is growing daily.
● Lending Platforms
● Decentralised Exchanges (DEXs)
● Wrapped Assets (WBTC)
● Prediction products – Oracles
● Non-Fungible Tokens (NFTs)
● Mix of the above
Read More: DeFi: What is Decentralized Finance
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These are similar services to those provided by existing organisations. The major difference with DeFi is that the products don’t rely on financial intermediaries such as banks,
clearinghouses or brokers. Instead, the combination of permissionless participation and programmable (Smart) contracts enables direct and automated processes to deliver
these services without the middlemen. The DeFi concept stretches far into regulated activities, where rules are in place to ensure that the products marketed follow legal norms and are scrutinised to ensure that participants are protected. Decentralised finance means that there is no intermediary, or ‘manager’, and thus many of these manual protections cannot be used; they are replaced by algorithmic protections. So, why DeFi? There are many sources for a complete explanation, but since products simply depend on code, they
can be launched very quickly, and with no cost. Financial products that we cannot imagine today will be created, helping enable the dream of a new Financial Future.
DeFi on Concordium
Concordium’s Smart Contract environment supports all current DeFi activities. The Concordium ecosystem features basic building blocks for DeFi, such as wrapped CCD tokens, NFT marketplaces, an Ethereum token bridge, and a decentralized exchange (ConcorDEX).
Further, our shielded transfers provide security and privacy of transfers to others and thereby de facto knowledge of detailed transfer intent and activity.
Building DeFi projects on Concordium brings more than a private and secure environment. The Concordium Identity Layer changes the way DeFi projects can be organized, enabling the classification of participants in a way which brings trust and as a result will attract larger participation.
The Concordium Identity Object consists of several attributes of a real-world identity that can be attested by an Identity Provider. These include personal attributes, such as a
name, date of birth, country of residence, etc. Upcoming Web3 ID support will feature verifiable credentials allowing for a wider range of attributes to be attested, such as work
experience, education, or credit history. The combination of these features enables the designing of DeFi projects where only the right mix of users is accepted.
This could be used to ensure that only participants with the right experience, training, and means are partaking. From a project point of view, this means greater trust from the
participants, who will be willing to place bigger investments. Conversely, it also means that the participants without the necessary qualifications to participate or the means to support
a margin call will not be able to.
The ID layer also means that the user who has deployed and initialized the DeFi smart contract can be identified, should this be required, using the Anonymity Revocation mechanism. For more information, see the separate Concordium ID document. This all means that Concordium has the required capabilities for building regulation-friendly DeFi applications.
Disclaimer: The information above does not constitute investment, financial, trading or any other sort of advice and you should not treat any of the content on this site such. We do not recommend the purchase, sale, or holding of any cryptocurrency or other product. None of our content should be deemed as an offer to purchase, sell, or hold a cryptocurrency or other product or service. Please consider doing your own research and prioritize consulting a certified financial professional before making any investment decisions.