Since traditional centralized systems have failed in offering people-centric services, decentralized finance is emerging as a better alternative.
With its open, trustless, and permissionless approach, DeFi is becoming the go-to place for finance, and the total value locked in DeFi sits at over $250 billion.
Alongside this significant development in the open financial system, there’s another rising trend: non-fungible tokens (NFTs). Given their unique characteristics, NFTs have had a huge impact on culture, finance, information, and ownership.
The market capitalization of NFTs is estimated to be over $20 billion as of February 2022. Due to their unique nature, they have added provable scarcity and immutable ownership to digital and real-world assets pegged to them.
However, these developments in DeFi and NFTs have so far happened somewhat in parallel. But given each one’s use cases and their supposed potential, if used together, calls for a platform like Deedy that could bridge these two sectors.
Deedy is building an NFT platform that will be powered by DeFi’s core principles of lending and renting. The goal of the platform is to build an ecosystem that will merge DeFi and NFTs.
Revolutionizing Information and Ownership with DeFi
Almost every facet of banking, lending, and trade is now handled through centralized systems that are run by regulating organizations and gatekeepers. To obtain anything from auto loans and mortgages, to trading stocks and bonds, people must deal with numerous financial intermediaries. Moreover, things are worse in some third-world countries, as the rise of corruption and faltering traditional financial systems result in people losing their hard-earned money.
DeFi challenges this centralized system by disempowering intermediaries, gatekeepers and empowering ordinary people through peer-to-peer, decentralized trades. As DeFi is powered by the decentralized infrastructure of blockchain, users retain complete ownership of their assets. Moreover, their funds are safe even in times of crisis as no central entity can control or restrict their funds in a DeFi ecosystem.
Although DeFi is in its early stages, it has already shown to be far more efficient than TradFi systems in terms of information access and ownership. Moreover, DeFi is advancing into other blockchain solutions, especially NFTs, to make finance even more efficient.
Connecting DeFi and NFTs with Deedy
DeFi ecosystems are flexible in that they can function with a wide range of financial solutions, instruments, and procedures. NFTs are one such asset that is currently being linked with DeFi systems to offer users additional utilities. The usage of NFTs and DeFi in tandem is assisting in solving problems with asset collateralization, where NFTs can be used as collateral to borrow loans. Furthermore, the ownership feature of NFTs is assisting DeFi ecosystem initiatives in tokenizing certain aspects of lending and borrowing.
Ultimately, DeFi and NFTs are correlating in many ways, and bridging the gap between them has become increasingly important. In that regard, platforms like Deedy enable this by allowing users to lend and rent NFTs. The platform employs a peer-to-peer lending mechanism that is secured by smart contracts, and users can get loans using their NFTs as collateral. Furthermore, it allows users to rent an NFT for a certain period of time in exchange for a one-time payment to the NFTs owner.
The platform’s mission is to lower the barrier of entry into the digital economy with an aim to revolutionize the future of ownership by harnessing blockchain technology while also aiding the transition towards Web3.
DeFi and NFTs: A Match Meant to Be
NFTs are unique for their security and scarcity, whereas DeFi is unique for its efficient financial solution. However, the combination of both will be a game-changer for many industries worldwide. This combination is powerful against TradFi systems that have failed to keep up all promises. Moreover, with platforms like Deedy bringing DeFi and NFTs at one place, the day is not far when these two solutions will power the future of finance.