What is DeFi?
DeFi, short for Decentralised Finance, refers to applications that aim to recreate financial services in a decentralised manner. Imagine earning interest, getting loans, trading synthetic assets and so on without relying on any third party or intermediary. Instead, you put your trust in computer code, or more precisely, in smart contracts running on, mostly, the Ethereum blockchain.
What we list and why we list them
We want to give our users access to as many digital assets as possible, and we are always keeping an eye out for the next big thing. However, it’s also very important for us to make sure that those assets are legitimate, trustworthy and - most importantly - still going to be around for the years to come. We go through a very in-depth process when we list assets on Bitpanda, you can read all about it here in this blog post.
As a disclaimer, it’s important to note that some of the projects are relatively young and while they passed our internal quality checks, you should be aware that they involve more risk than established assets like BTC or ETH. Please be aware of the risks involved.
Here are the six DeFi assets that are now available on Bitpanda:
Filecoin (FIL)
The basic concept of Filecoin is that users can rent out their unused hard drive space to others and earn rewards for doing so. Think of a decentralised, blockchain-powered version of Dropbox or Google Drive. Under the hood, Filecoin is an open-source cloud storage network for both decentralised file storage and content distribution. As a user, you can store your data, mine FIL tokens by contributing your hard drive storage to the network or build applications running on the Filecoin network. Filecoin is one of the most anticipated projects that originated out of the ICO hype of 2017. They raised over $200 million within 30 minutes in a token sale in September 2017, which was the most successful Initial Coin Offering (ICO) back then. In October 2020, the mainnet of the Filecoin network finally launched. You can find more information about Filecoin and the FIL token on their official page.
UMA (UMA)
The core idea of UMA, which is the abbreviation for Universal Market Access, is what the name implies: give anyone access to the derivatives market. To do that, its founder, Hart Lambur, who worked as a professional trader at Goldman Sachs, and his team built the UMA protocol running on the Ethereum network. Their vision: put derivatives on the blockchain. To do that, UMA was conceived as an open-source protocol that allows anyone to create their own financial contracts. This means that you can basically create your own financial products: synthetic tokens that track the price of anything, decentralised crypto futures or interest-paying synthetic tokens. You can read more about UMA and its possible use cases on the official UMA website.
Aave (AAVE)
Aave allows its users to act as borrowers and lenders. Technically, it is a decentralised open-source protocol running on Ethereum that allows the creation of money markets. Its users can, on one side, deposit digital assets to earn interest on them. On the other side, users can also borrow assets in both an overcollateralised and undercollateralised way. AAVE is the governance token of the Aave protocol and used to be called LEND before a migration that happened in October 2020. Fun fact: “Aave” is the Finnish word for “ghost”, which according to the team, symbolises their vision of creating a transparent and open DeFi infrastructure. You can read more about Aave on their official website.
Ren (REN)
Ren is an open-source protocol running on the Ethereum network. The basic idea behind it is to allow the transfer of different digital assets between different blockchains. What this means is that assets like Bitcoin (BTC), Bitcoin Cash (BCH), ZCash (ZEC) and more can be used in combination with Ethereum. REN is the token of the REN protocol and ecosystem which powers the network. Users can run so-called Darknodes to contribute to the network and earn rewards for doing so. You can read more about Ren on their official website.
Kyber Network (KNC)
Kyber Network Crystal (KNC) is a blockchain-based protocol where developers can build payment flows, applications and token swaps. The network allows anyone to swap a token instantly without the use of an exchange. Their ERC20 utility token, KNC, aims to build a community of stakeholders who determine the incentive of the system. KNC holders also get voting rights on the Kyber Network platform for issues such as fees and distributions, along with other vital decisions. Users can use KNC to pay for loans, collateral and margin trading on DeFi platforms. You can read more about KNC on the official website.
Band Protocol (BAND)
Band Protocol is a cross-chain data oracle platform that connects APIs to smart contracts and also enables DeFi applications to be built on-chain. It aims to be the go-to data infrastructure layer for Web 3.0 applications by providing decentralised, curated off-chain data to smart contracts. Users can receive BAND tokens as a reward and incentive for validators to produce new blocks and submit responses to data requests. Users can use the tokens in three ways: to become validators, to earn a portion of the collected fees and inflationary rewards by delegating their holdings to another validator and lastly, to participate in the chain’s governance. Find out more on their official website.
