The main advantage of blockchain technology is a possibility to build applications that are permissionless, reliable, seamlessly interoperable, censorship-resistant, and independent from third-party activity. These properties enable a rethinking of digital industries towards p2p-based, open-source systems that prevent the capture of system value at some central point. The opportunities created are drawing developers, investors, and users to new products built on top of blockchain protocols. In the world of finance, these pioneers are transferring well-known and historically proven financial instruments, approaches and business models into a decentralized environment that aims to reframe the industry.
What is DeFi?
DeFi is a shared community of projects developing open-source financial primitives that started in autumn of 2018. The core principles of DeFi are interoperability, open-source, permissionlessness, and financial transparency. The goal of this community is to promote decentralized finance projects, onboard new users and developers, and cooperate to develop the finance system of a new generation. From the initial 12 projects, DeFi significantly expanded during the last eight months and holds more than $500 mln of value in its financial applications.
Most notable projects
A few early projects stand out with visionary protocol designs and early successes in transforming finance. For now, they are built on the Ethereum blockchain.
• MakerDAO - a community-governed decentralized issuance system that allows issuing assets with prices pegged to other assets. Its first big application is the non-asset-backed stablecoin DAI, pegged to the USD
• Dharma - a protocol for lending and borrowing crypto using other crypto tokens as a collateral
• Augur - a platform for prediction markets, which allows users to trade outcomes of real-world events such as weather, cataclysms or presidential elections
• dX/dY - a decentralized protocol for derivatives and margin trading
• Compound - a decentralized protocol for money markets that allows users to safely earn interest on their crypto holdings using algorithmic markets and instantly take collateralized loans.
• Centrifuge – a platform for secure p2p exchange of crucial financial information between businesses
Another emerging concept that is tightly connected with the DeFi is the Decentralized Autonomous Organization (DAO). Based on blockchain technology, a DAO enables the digital implementation of collaborative work efforts, collective decision-making, and management of shared resources. The best-known platform for DAO creation is Aragon, which also operates as a DAO itself. Akropolis’ vision sees the future of decentralized finance at the intersection of blockchain-based financial primitives and DAO-like models for governance of these protocols.
DeFi and Akropolis
Akropolis is making use of DeFi applications and its technological foundation to provide new opportunities to the successful structures of the large global informal economy. The Ethereum blockchain serves as the foundation to allow savings groups to operate smoothly in a digital environment, with permissionless, reliable and secure transactions. Akropolis combines the DeFi approach with the concept of Decentralized Autonomous Organizations (DAOs), which have become popular as governance infrastructures for groups to cooperate and oversee a shared crypto venture. Akropolis thus uniquely combines the benefits of DeFi, the lessons from successful DAOs, and a commitment to positive impact by empowering individuals to save and grow as groups within proven social cooperation models.
At the present moment, Akropolis is building a product in collaboration with notable DeFi projects: MakerDAO, Aragon, and Melonport. Besides cooperation in the field of technology and development, Akropolis will integrate DeFi services to expand the functionality of the product. Integration plans on the current development agenda include Compound, MakerDAO, and Centrifuge.