WTF is Dot.Finance?
Everything You Need To Know About The New Dot.Finance Project
Decentralized Finance, also known as DeFi, is taking the financial world by storm. But like most new technologies, it is riddled with confusing jargon and concepts that are difficult to grasp without training. That can create a barrier to new investors who are genuinely interested in participating in this revolutionary movement. We want to help remove that barrier by covering some of the fundamental aspects of DeFi as well as the growing "Dot.Finance" network.
Let's start at the very beginning …
What Is Decentralized Finance?
DeFi can refer to any number of products or services that work on peer-to-peer(P2P) networks and allow the trading of cryptocurrencies. The services provided are often intended to replicate those available at traditional financial institutions, such as investing, interest savings, and cryptocurrency loans. They may rely on a single virtual token or allow a broad range of cryptocurrencies.
DeFi is an exciting concept because it has the potential to eliminate the many overbearing bankers, brokers, and financial institutions that we are used to today. It allows for financial transactions to occur around the clock regardless of business hours or physical location. Transactions can occur faster and without the many limitations that currently exist. Furthermore, the sense of transparency and security available with DeFi is unparalleled.
Cryptocurrencies have been around for a while now, but the DeFi market didn't really begin to boom until 2020. Emerging networks like Polkadot and Ethereum created the foundations for a variety of apps, websites, and virtual services. In 2019, the industry was worth roughly $700 million. Recent estimates have reported a value now closer to $40 billion. That's a lot of growth and there are a lot of exciting new services to show for it.
But a year or two isn't nearly enough time for such advanced technologies to reach perfection. There are still plenty of obstacles that prevent interested investors from jumping in with both feet. Luckily, we have some great companies like Dot.Finance working to create sophisticated solutions to these problems.
These companies create apps and services that function on existing blockchain networks. They improve the user experience, increase transaction speeds, and add new layers of digital security. These services are making it easier for novice traders and investors to get involved with an otherwise confusing and complicated market.
What Is Dot.Finance?
One of the services that we've heard quite a bit about over the previous year is dot.finance. They have an incredible team of developers and investors working to produce decentralized finance applications (DAPPS) that benefit everyone involved. They have attracted some big-name investors and spent quite a bit of time in the spotlight with various DeFi news outlets.
Dot.Finance applications are designed specifically to work with the Polkadot network. This network provides the essential blockchain infrastructure needed for DeFi applications to function. One of the main functions of a network like this is the ability to generate smart contracts that are then distributed to all peer nodes on the network. Polkadot is one of the most sophisticated blockchain networks on the market today.
Large organizations often take advantage of networks like Polkadot with ease. They provide excellent DeFi services without all of the hassles of traditional financial institutions. It's easy for them because they have teams of trained, educated professionals who have been working with blockchain technologies since the first Bitcoin was traded.
But what about the "average Joes"? There are many investors who could benefit from networks like Polkadot, but they never get the chance because there are too many barriers to participation. That's where Dot.Finance comes into play. Sure, their applications benefit large organizations as well. But their primary focus has always been the ordinary people. Your average investors and traders who simply want to get involved with DeFi. And they've created several useful applications specifically for that.
What Makes Dot.Finance Exciting?
Two words: Yield Farming
If you're familiar with crypto trading, then you've probably encountered the concept. Dot.Finance certainly didn't invent yield farming. It's been around for a while and is one of the primary methods that traders use to build their stash of funds. But what Dot.Finance is doing is making it easy and accessible for everyone. Not just hardcore traders with countless hours available to spend on the act.
Yield farming is generally considered a form of passive income that can be explained as a fairly simple concept. It involves lending cryptocurrency to other traders using smart contracts. You then receive cryptocurrency payment for the service you provide. Unfortunately, yield farming is rarely as straightforward and simple as this explanation would imply.
A more thorough explanation requires terms like "permissionless liquidity" and "cross-chain bridges". It is an evolving investment strategy that lets you put your existing crypto stash to work without experiencing any significant risk. But if it was as simple as it sounds, then many more investors would be taking advantage of the system and earning an extra income.
Dot.Finance is publishing technological innovations that make yield farming as simple as it should be. This is what makes Dot.Finance such an exciting platform. Over the coming years, their applications will open the world of DeFi and yield farming to eager investors around the world. Yield farming will undoubtedly become a more mainstream concept thanks to their hard work.
And here's how they are doing it…
1. A User-Friendly Yield Aggregator
One of the most important tools in the field of yield farming is the yield aggregator. There are nearly as many aggregators as there are blockchain networks. Each one is more convoluted than the next and they certainly aren't designed with the novice in mind. The Dot.Finance yield aggregator is one of the first of its kind and it works exceptionally well with Polkadot networks.
Yield aggregators are intended to simplify and automate the process of finding smart contracts for yield farming. In the past, investors needed to manually hunt down opportunities on the network and then make the smartest choice and the perfect time. As you can imagine, this was incredibly tedious and required an elaborate understanding of the network.
The Dot.Finance yield aggregator does all of this work for you using a sophisticated protocol. You put your funds in the aggregator and it handles all of the data behind the scene. This means you are able to find and execute profitable trades on the Polkadot network with much greater speed and reliability. And the best part is that this particular aggregator is designed with the newcomer in mind.
2. Advanced Auto Compounding Features
In addition to its user-friendly design, this is another incredible feature of the Dot.Finance aggregator. Compounding is an important part of any smart financial roadmap. It's what turns an annual 365 percent yield into a 3,678 percent yield. You don't need to be a mathematician to understand just how much better that is. But just like most tasks involved with yield farming, compounding is a tedious and time-consuming process. Dot.Finance's ability to automate this process is groundbreaking and will have a tremendous impact on your earning potential.
3. The PINK Token
Governance tokens serve a variety of purposes in every blockchain network. We're going to cover more about the PINK token in the next section. But what's important to note here is that the compounding feature of the yield aggregator provides users with PINK tokens in addition to their standard earnings. The additional distribution of this token can have a significant impact on your annual earning.
So what exactly is the PINK token?
The Dot.Finance Token & Governance Model
the governance model of a particular network controls how the digital protocol is shaped throughout the future. Remember, these are designed to be decentralized financial networks without any single governing body. That means a single individual or entity does not have complete control over what changes occur. Instead, it happens in a somewhat democratic fashion with governance tokens used to cast votes.
The Dot.Finance PINK token has not officially launched yet and as such the details are not entirely clear. What we do know is that these tokens are not traded speculatively like other currencies. We also know that they work like a multiplier that improves the standard reward yield from trades. That's why when combined with auto compounding they allow for a much greater APY than we are used to seeing on blockchain networks.
Who Is On The Dot.Finance Team?
This service has had several great developers and advisors on board from the very beginning. The core team was already well known in the DeFi community for their development of the Bancor project. Bancor was a huge success and introduced many great concepts that other platforms are still struggling to adapt. Here are some of the big names on the team.
- Nir Rozin: CEO
- Or Bachar: Former Bancor developer
- Ariel Zimroni: Lead product contributor
- Or Dadosh: Lead Tech advisor
- Liam Cohen: Lead marketing advisor
What Funds Dot.Finance?
Dot.Finance receives funding from a variety of investors, traders, and organizations. The project is relatively new and has already received millions in funding and that number will undoubtedly climb as the platform becomes public. Funding also comes from the individual traders and investors who use the platform and pay for necessary fees.
How To Participate In The Dot.Finance Network?
The best way to get involved with the project is to visit their website and follow their updates on social media. Some of their contributions to the Polkadot network are already live. However, their major products like the simplified yield farming are still on the verge of release. We expect to see big things from them over the following months and there will certainly be many ways to participate in the network. Until then, we advise familiarizing yourself with decentralized finance, cryptocurrency, and the Polkadot network.
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