Consulting giant Fool analysts highlight an altcoin project from thousands of cryptocurrencies. According to experts, this altcoin can stay in your basket forever.
New age of finance
The traditional financial world relies on central authorities such as banks, notaries, brokers, stock exchanges and other intermediaries that manage and process financial services. Traditional financial processes, such as applying for a loan or purchasing stock, require some type of intermediary to carry out the transaction. But due to Ethereum and its innovative smart contract technology, these traditional financial processes are getting old fast. Smart contracts are the backbone of DeFi and what makes Ethereum so unique. Before it was created in 2014, no other cryptocurrency had smart contract capabilities. The creation of smart contracts allows Blockchain developers to customize conditions and criteria to execute certain actions.
For example, smart contracts can supervise loan agreements. They also have full refund upon deposit features. Because smart contracts can integrate with other data, they can also issue agricultural drought insurance policies, paying automatically if the agreed amount of precipitation occurs.
In addition to their seemingly endless customization and potential, smart contracts and DeFi could completely subvert what we believe traditional institutions play in the world of finance. One of the most attractive aspects of DeFi is its inclusiveness. If you want to take advantage of a DeFi financial product, all you need is an internet connection. There are no credit bureaus, brokers and loan officers. As long as a crypto wallet is set up, users can exchange assets anytime and anywhere.
First mover advantage of leading altcoin project
Since Ethereum is the first Blockchain with smart contract functionality, it holds the bulk of the DeFi industry. Tron, Binance Coin and Avalanche Ethereum are new competitors. But they still face a tough battle as Ethereum’s DeFi economy is huge.
To compare the aggregate value of a Blockchain’s DeFi ecosystem, we can look at a statistic called Total Value Locked (TVL). Think of it like the market value of a company. As of this writing, about $36 billion of the $62.5 billion invested in DeFi belongs to Ethereum. The next closest competitor is Tron and it only supports around $9 billion worth.
The potential long-term value that DeFi offers is still in its infancy. Therefore, it should be weighed heavily by investors. However, there are people who are optimistic that DeFi will replace traditional finance. This group should trust that Ethereum will continue to dominate for the foreseeable future.
