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Decentralized finance (DeFi) is one of the ecosystems that has grown the most in volume of transactions and users in recent years. Between 2020 and the present 2021, the amount of cryptocurrencies deposited in smart contracts of these platforms has exceeded billions of dollars in networks such as Ethereum.
Also, as the community embraces this new sector of the market, developers have experimented with the possibility of recreating traditional financial instruments in decentralized software architectures . In this way, now users accustomed to digital banking and crypto assets have access to a variety of products that are not only limited to the exchange of value.
From loan services, through automated exchanges and new savings methods, DeFi solutions are presented as a sector capable of incorporating greater complexity into monetary transactions without the need to resort to an intermediary as a guarantor. They even allow the exploration of use cases that go beyond the financial world: such as works of art, domain names (DNS) and even video games.
Ethereum is the blockchain network that most strongly capitalized on the explosion of interest generated by DeFi in recent months. According to a report by Dapp Radar, by mid-2020 96% of transactions made by DeFi applications were processed on Ethereum . This can be seen if we think about the most successful projects in this market, such as Uniswap, MakerDao, Axie Infinity or Compound, platforms that have seen their success among Ethereum users consolidated.
However, the fact that at first the DeFi ecosystem was concentrated in a single blockchain network has brought problems to the proper development and operation of these applications. The resounding success of decentralized finance has congested the Ethereum network on more than one occasion, raising its transaction fees, as CriptoNoticias has reported on more than one occasion.
RSK wants to reconnect DeFi with Bitcoin
As a result, other smart contract networks have begun to serve as potential venues for the development of a more distributed DeFi community. Blockchains like EOS, Tron and Stellar have taken the first steps to build interoperability bridges with Ethereum.
With this in mind, many are committed to taking decentralized finance to where it all originated: returning to Bitcoin , in a clear attempt to offer users new options to carry out their financial operations.
The Bitcoin RSK sidechain, backed by Bitcoin mining, is one of the projects that is behind the search to consolidate its own DeFi market.
In this way, the Argentine initiative offers bitcoin owners the possibility of accessing savings solutions, derivatives of cryptocurrencies, stablecoins, decentralized markets (DEX) and even the sale and purchase of decentralized domain names.
According to RSK, its focus is on offering a network with greater scalability and much cheaper transaction fees . Two elements that, they consider, could further motivate the growth of DeFi. Next, we will take a tour of some of the financial services that are operational in this side chain for 2021.
One of the first DeFi solutions to hit the market was stablecoins, also known as stablecoins, which are nothing more than a type of token designed to maintain linkage with the price of another asset or currency. For example, most stablecoins are pegged to the dollar, although there are exceptions that are pegged to other fiat currencies or even crypto assets.
In the case of RSK, Dollar on Chain (DOC) It is the most popular stablecoin on the network , being traded on platforms such as Paxful and Hodl Hodl. Issued and backed by the Money on Chain company, it is a token anchored at the price of the dollar.
Another stablecoin widely used by RSK users is its native RBTC currency. Simply put, RBTC is a collateralized asset that is parity with the bitcoin price. In this way, Bitcoin users can trade on RSK platforms using their cryptocurrencies.
As for stable cryptocurrencies that make life on this side chain , we cannot forget about RIF Dollar. A token created for the solution Rif on Chain released in April 2020, along with other assets that act as derivatives (RIFX) and savings tools (RifPRO). This stablecoin, although it is anchored to the price of the dollar, does not need a debt guaranteed in said fiat currency to be issued.
That is, unlike others assets such as Tether where users deposit dollars in an account to issue new tokens, RSK supports the issuance of said stablecoins in the reserves of a proprietary currency known as RIF. Simply put, it is a stablecoin collateralized with a crypto asset.
RIF tokens, which represent the third layer of financial infrastructure of RSK (RSK Infrastructure Framework), are used as collateral for the issuance of this stablecoin that (even so) continues to emulate the price of the dollar.
In addition to The aforementioned, in the RSK network also coexists one of the first stablecoins anchored to the Brazilian real (known as BRZ) and a representation of DAI that is one of the most used stablecoins in the Ethereum market. Both solutions demonstrate the interoperability opportunities that smart contract networks have in connecting the entire DeFi ecosystem.
One of the most used financial tools around of the world are derivatives, so in decentralized finance these solutions were not going to be left aside. Derivatives can be described as tradable assets that are anchored to other value products in order to track their price and provide exposure to traders.
In the traditional market there are already several derivative options with cryptocurrency indices or that are anchored to the price of the dollar, as is the case with ETFs. Capitalizing on the interest, the developers that make life at RSK have also explored the possibilities of these tools on their DeFi platform, Rif on Chain, where they presented their leveraged asset RIFX.
This token allows cryptocurrency traders to have exposure to the price movements of the RIF token, of which we have already spoken. In this way, investors can invest in the RIFX derivative of the third layer developed by RSK and generate strategies around market variations. Yes, as if it were stocks on the stock market.
Banks and mutual funds are not the only ones now methods to generate income with your money. With the emergence of DeFi in the cryptocurrency market, many companies have begun to offer the possibility of generating income with their savings and the RSK network also has its own solution.
This is RIFPro, a token emulates the price of the RIF asset and can be generated from RDOC stablecoin deposits . Users who acquire this token will be able to do staking with it by depositing it in an address with the goal of generating long-term income.
Liquidity pools, also known in English as liquidity pools , are solutions originating from the DeFi ecosystem that aim to facilitate asset trading. In other words, they are liquidity providers that offer their users money availability at any time. The platform offers performance on the tokens that they deposit in their smart contracts, just like a loan.
Liquidity providers generate income when their capital is lent to merchants who need tokens at a certain time to.
The Ethereum market, Uniswap is one of the most used applications as a liquidity pool. In the case of RSK, there is a fork of the Uniswap platform that makes life as a pool in RSK under the name of “RSK Swap”. On its website, the project is described as “a fully decentralized protocol for the provision of liquid ez automated. ”
Decentralized Exchanges (DEX)
Exchanges Decentralized (DEX) solutions are one of the first solutions that were born in the DeFi community and one of the most popular ones, since through smart contracts cryptocurrencies can be exchanged without the need for a bank as an intermediary or depending on custody systems.
RSK has had the Decentralized Token Exchange (TEX) for more than half year , being another of the applications developed by the startup Money on Chain.
On this platform you can exchange tokens that circulate on the RSK network, such as such as stablecoins DoC, rBTC, RDollar and even the crypto asset RIF.
Last but not least, there are the non-fungible tokens (NFT) that are cryptographic assets that represent a unique and unrepeatable product. NFTs, today, are used to represent works of art, digital images, game pieces and collectibles.
One of the most recent projects the RSK network comes with the company Nifty Labs, which will help facilitate the creation of NFT. The initiative will allow tokenize gaming products, including metaverses, which will be interoperable with other networks such as Ethereum.
In conjunction with this initiative, the RSK network has also launched a sale of domain names. Known as RSK Name Service (RNS), users can coin Internet addresses as non-fungible tokens to determine the authenticity of the domain and its ownership. Because they are created under the NFT standard, such domain names can also be registered as unrepeatable products, thus avoiding their piracy.