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Crypto-Powered - The Most Promising Use-Cases of Decentralized Finance (DeFi)

Crypto-Powered - The Most Promising Use-Cases of Decentralized Finance (DeFi)
A whirlwind tour of Defi, paying close attention to protocols that we’re leveraging at Genesis Block.
This is the third post of Crypto-Powered — a new series that examines what it means for Genesis Block to be a digital bank that’s powered by crypto, blockchain, and decentralized protocols.
Last week we explored how building on legacy finance is a fool’s errand. The future of money belongs to those who build with crypto and blockchain at their core. We also started down the crypto rabbit hole, introducing Bitcoin, Ethereum, and DeFi (decentralized finance). That post is required reading if you hope to glean any value from the rest of this series.
97% of all activity on Ethereum in the last quarter has been DeFi-related. The total value sitting inside DeFi protocols is roughly $2B — double what it was a month ago. The explosive growth cannot be ignored. All signs suggest that Ethereum & DeFi are a Match Made in Heaven, and both on their way to finding strong product/market fit.
So in this post, we’re doing a whirlwind tour of DeFi. We look at specific examples and use-cases already in the wild and seeing strong growth. And we pay close attention to protocols that Genesis Block is integrating with. Alright, let’s dive in.


Stablecoins are exactly what they sound like: cryptocurrencies that are stable. They are not meant to be volatile (like Bitcoin). These assets attempt to peg their price to some external reference (eg. USD or Gold). A non-volatile crypto asset can be incredibly useful for things like merchant payments, cross-border transfers, or storing wealth — becoming your own bank but without the stress of constant price volatility.
There are major governments and central banks that are experimenting with or soon launching their own stablecoins like China with their digital yuan and the US Federal Reserve with their digital dollar. There are also major corporations working in this area like JP Morgan with their JPM Coin, and of course Facebook with their Libra Project.
Stablecoin activity has grown 800% in the last year, with $290B of transaction volume (funds moving on-chain).
The most popular USD-pegged stablecoins include:
  1. Tether ($10B): It’s especially popular in Asia. It’s backed by USD in a bank account. But given their lack of transparency and past controversies, they generally aren’t trusted as much in the West.
  2. USDC ($1B): This is the most reputable USD-backed stablecoin, at least in the West. It was created by Coinbase & Circle, both well-regarded crypto companies. They’ve been very open and transparent with their audits and bank records.
  3. DAI ($189M): This is backed by other crypto assets — not USD in a bank account. This was arguably the first true DeFi protocol. The big benefit is that it’s more decentralized — it’s not controlled by any single organization. The downside is that the assets backing it can be volatile crypto assets (though it has mechanisms in place to mitigate that risk).
Other notable USD-backed stablecoins include PAX, TrueUSD, Binance USD, and Gemini Dollar.
tablecoins are playing an increasingly important role in the world of DeFi. In a way, they serve as common pipes & bridges between the various protocols.

Lending & Borrowing

Three of the top five DeFi protocols relate to lending & borrowing. These popular lending protocols look very similar to traditional money markets. Users who want to earn interest/yield can deposit (lend) their funds into a pool of liquidity. Because it behaves similarly to traditional money markets, their funds are not locked, they can withdraw at any time. It’s highly liquid.
Borrowers can tap into this pool of liquidity and take out loans. Interest rates depend on the utilization rate of the pool — how much of the deposits in the pool have already been borrowed. Supply & demand. Thus, interest rates are variable and borrowers can pay their loans back at any time.
So, who decides how much a borrower can take? What’s the process like? Are there credit checks? How is credit-worthiness determined?
These protocols are decentralized, borderless, permissionless. The people participating in these markets are from all over the world. There is no simple way to verify identity or check credit history. So none of that happens.
Credit-worthiness is determined simply by how much crypto collateral the borrower puts into the protocol. For example, if a user wants to borrow $5k of USDC, then they’ll need to deposit $10k of BTC or ETH. The exact amount of collateral depends on the rules of the protocol — usually the more liquid the collateral asset, the more borrowing power the user can receive.
The most prominent lending protocols include Compound, Aave, Maker, and Atomic Loans. Recently, Compound has seen meteoric growth with the introduction of their COMP token — a token used to incentivize and reward participants of the protocol. There’s almost $1B in outstanding debt in the Compound protocol. Mainframe is also working on an exciting protocol in this area and the latest iteration of their white paper should be coming out soon.
There is very little economic risk to these protocols because all loans are overcollateralized.
I repeat, all loans are overcollateralized. If the value of the collateral depreciates significantly due to price volatility, there are sophisticated liquidation systems to ensure the loan always gets paid back.


Buying, selling, and trading crypto assets is certainly one form of investing (though not for the faint of heart). But there are now DeFi protocols to facilitate making and managing traditional-style investments.
Through DeFi, you can invest in Gold. You can invest in stocks like Amazon and Apple. You can short Tesla. You can access the S&P 500. This is done through crypto-based synthetics — which gives users exposure to assets without needing to hold or own the underlying asset. This is all possible with protocols like UMA, Synthetix, or Market protocol.
Maybe your style of investing is more passive. With PoolTogether , you can participate in a no-loss lottery.
Maybe you’re an advanced trader and want to trade options or futures. You can do that with DeFi protocols like Convexity, Futureswap, and dYdX. Maybe you live on the wild side and trade on margin or leverage, you can do that with protocols like Fulcrum, Nuo, and DDEX. Or maybe you’re a degenerate gambler and want to bet against Trump in the upcoming election, you can do that on Augur.
And there are plenty of DeFi protocols to help with crypto investing. You could use Set Protocol if you need automated trading strategies. You could use Melonport if you’re an asset manager. You could use Balancer to automatically rebalance your portfolio.
With as little as $1, people all over the world can have access to the same investment opportunities and tools that used to be reserved for only the wealthy, or those lucky enough to be born in the right country.
You can start to imagine how services like Etrade, TD Ameritrade, Schwab, and even Robinhood could be massively disrupted by a crypto-native company that builds with these types of protocols at their foundation.


As mentioned in our previous post, there are near-infinite applications one can build on Ethereum. As a result, sometimes the code doesn’t work as expected. Bugs get through, it breaks. We’re still early in our industry. The tools, frameworks, and best practices are all still being established. Things can go wrong.
Sometimes the application just gets in a weird or bad state where funds can’t be recovered — like with what happened with Parity where $280M got frozen (yes, I lost some money in that). Sometimes, there are hackers who discover a vulnerability in the code and maliciously steal funds — like how dForce lost $25M a few months ago, or how The DAO lost $50M a few years ago. And sometimes the system works as designed, but the economic model behind it is flawed, so a clever user takes advantage of the system— like what recently happened with Balancer where they lost $500k.
There are a lot of risks when interacting with smart contracts and decentralized applications — especially for ones that haven’t stood the test of time. This is why insurance is such an important development in DeFi.
Insurance will be an essential component in helping this technology reach the masses.
Two protocols that are leading the way on DeFi insurance are Nexus Mutual and Opyn. Though they are both still just getting started, many people are already using them. And we’re excited to start working with them at Genesis Block.

Exchanges & Liquidity

Decentralized Exchanges (DEX) were one of the first and most developed categories in DeFi. A DEX allows a user to easily exchange one crypto asset for another crypto asset — but without needing to sign up for an account, verify identity, etc. It’s all via decentralized protocols.
Within the first 5 months of 2020, the top 7 DEX already achieved the 2019 trading volume. That was $2.5B. DeFi is fueling a lot of this growth.
There are many different flavors of DEX. Some of the early ones included 0x, IDEX, and EtherDelta — all of which had a traditional order book model where buyers are matched with sellers.
Another flavor is the pooled liquidity approach where the price is determined algorithmically based on how much liquidity there is and how much the user wants to buy. This is known as an AMM (Automated Market Maker) — Uniswap and Bancor were early leaders here. Though lately, Balancer has seen incredible growth due mostly to their strong incentives for participation — similar to Compound.
There are some DEXs that are more specialized — for example, Curve and mStable focus mostly only stablecoins. Because of the proliferation of these decentralized exchanges, there are now aggregators that combine and connect the liquidity of many sources. Those include Kyber, Totle, 1Inch, and
These decentralized exchanges are becoming more and more connected to DeFi because they provide an opportunity for yield and earning interest.
Users can earn passive income by supplying liquidity to these markets. It usually comes in the form of sharing transaction fee revenue (Uniswap) or token rewards (Balancer).


As it relates to making payments, much of the world is still stuck on plastic cards. We’re grateful to partner with Visa and launch the Genesis Block debit card… but we still don’t believe that's the future of payments. We see that as an important bridge between the past (legacy finance) and the future (crypto).
Our first post in this series shared more on why legacy finance is broken. We talked about the countless unnecessary middle-men on every card swipe (merchant, acquiring bank, processor, card network, issuing bank). We talked about the slow settlement times.
The future of payments will be much better. Yes, it’ll be from a mobile phone and the user experience will be similar to ApplePay (NFC) or WePay (QR Code).
But more importantly, the underlying assets being moved/exchanged will all be crypto — digital, permissionless, and open source.
Someone making a payment at the grocery store check-out line will be able to open up Genesis Block, use contactless tech or scan a QR code, and instantly pay for their goods. All using crypto. Likely a stablecoin. Settlement will be instant. All the middlemen getting their pound of flesh will be disintermediated. The merchant can make more and the user can spend less. Blockchain FTW!
Now let’s talk about a few projects working in this area. The xDai Burner Wallet experience was incredible at the ETHDenver event a few years ago, but that speed came at the expense of full decentralization (can it be censored or shut down?). Of course, Facebook’s Libra wants to become the new standard for global payments, but many are afraid to give Facebook that much control (newsflash: it isn’t very decentralized).
Bitcoin is decentralized… but it’s slow and volatile. There are strong projects like Lightning Network (Zap example) that are still trying to make it happen. Projects like Connext and OmiseGo are trying to help bring payments to Ethereum. The Flexa project is leveraging the gift card rails, which is a nice hack to leverage existing pipes. And if ETH 2.0 is as fast as they say it will be, then the future of payments could just be a stablecoin like DAI (a token on Ethereum).
In a way, being able to spend crypto on daily expenses is the holy grail of use-cases. It’s still early. It hasn’t yet been solved. But once we achieve this, then we can ultimately and finally say goodbye to the legacy banking & finance world. Employees can be paid in crypto. Employees can spend in crypto. It changes everything.
Legacy finance is hanging on by a thread, and it’s this use-case that they are still clinging to. Once solved, DeFi domination will be complete.

Impact on Genesis Block

At Genesis Block, we’re excited to leverage these protocols and take this incredible technology to the world. Many of these protocols are already deeply integrated with our product. In fact, many are essential. The masses won’t know (or care about) what Tether, USDC, or DAI is. They think in dollars, euros, pounds and pesos. So while the user sees their local currency in the app, the underlying technology is all leveraging stablecoins. It’s all on “crypto rails.”
When users deposit assets into their Genesis Block account, they expect to earn interest. They expect that money to grow. We leverage many of these low-risk lending/exchange DeFi protocols. We lend into decentralized money markets like Compound — where all loans are overcollateralized. Or we supply liquidity to AMM exchanges like Balancer. This allows us to earn interest and generate yield for our depositors. We’re the experts so our users don’t need to be.
We haven’t yet integrated with any of the insurance or investment protocols — but we certainly plan on it. Our infrastructure is built with blockchain technology at the heart and our system is extensible — we’re ready to add assets and protocols when we feel they are ready, safe, secure, and stable. Many of these protocols are still in the experimental phase. It’s still early.
At Genesis Block we’re excited to continue to be at the frontlines of this incredible, innovative, technological revolution called DeFi.
None of these powerful DeFi protocols will be replacing Robinhood, SoFi, or Venmo anytime soon. They never will. They aren’t meant to! We’ve discussed this before, these are low-level protocols that need killer applications, like Genesis Block.
So now that we’ve gone a little deeper down the rabbit hole and we’ve done this whirlwind tour of DeFi, the natural next question is: why?
Why does any of it matter?
Most of these financial services that DeFi offers already exist in the real world. So why does it need to be on a blockchain? Why does it need to be decentralized? What new value is unlocked? Next post, we answer these important questions.
To look at more projects in DeFi, check out DeFi Prime, DeFi Pulse, or Consensys.
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General info and list of exchanges for DCORP Utility (DRPU)

Whats DCORP? DCORP is autonomous, decentralized and democratic. An organization that exists on the blockchain as a series of smart-contracts. DCORP manages its own tokens (DRPS/DRPU) and the Ether that it holds. Is the exchange profit (after deducting all operational cost) shared with all DRPS holders? 2/3 of the profits will go directly back into the smart contract if cashflow allows it, and if we do not need the funds for future investments, 1/3 of the profits goes back to DCORP. Is the profit shared in ETH or EUR? The profit is shared in Euro because the exchange is based in the Netherlands. Euro can always be converted into ETH before the payout. The proposal says for Q1: "Secure initial investment / working capital". What does this mean? This means securing the support of the community for the new direction. "API for 3rd party integrations and algorithmic trading" - does this mean bots can use these API's to trade, or that the API only provides data? This means that machine will be made available as an interface to our users. With this interface, it is possible to perform several actions through software.
Examples include: placing orders, querying order status’, balances, and market data (volume, order book, spot price, etc.). Algorithmic trading refers to the process of trading using software and algorithms at a speed that is orders of magnitudes faster than a human is able to trade.
How many developers will work at the Exchange right from the beginning? In the Whitepaper only Frank is declared as Lead Developer At this moment we cannot give a staffing number. Once we decided on the exchange software supplier we also know the exact requirements. That will allow us to analyze how to integrate this into our platform and budget accordingly. It seems the SEC considers almost all coins as securities. If this is the case the split into DRPS and DRPU is not changing anything for DCORP. Any plan for this? Can DCORP explain the functionality of DRPU and DRPS in light of these new developments? As the past year has proven, financial regulations for securities are changing and evolving rapidly. We keep a close eye on these developments and keep in mind that specific DRPU/DRPS use cases may be developed in the near future that adopt to changed regulations. If CME can do derivatives, why can’t we? Is there a response from the Dcorp team on trueEX LLC planning to offer derivatives on crypto? / What are the principle regulations that made us put our DEP on the shelves? Because of the heavy development of financial regulations for derivative cryptocurrency products, increased enforcement of these laws, and more recently even banning them for offering to specific customer groups (consumers mostly), there is currently no viable and secure business case to be made.
This is DCORP’s current assessment. If we evaluate such a business case can be made in the future, we shall certainly investigate and try to make it work.
Are we planning to register with SEC? Do we need to? As a Dutch based company, we shall first seek compliance endorsements or exemptions from Dutch and European regulators. If and when that becomes necessary for products involved, we shall seek SEC compliance approval. To this end we keep in touch with US security lawyers. Can't you create a SEC compliant derivatives exchange? I think one can follow the regulations and create one. Many exchanges are applying for license to sell security tokens. US institutes are selling derivatives of bitcoin. How come now we have this problem all of a sudden? As a Dutch based company, we shall first seek compliance endorsements or exemptions from Dutch and European regulators.
Because of the heavy development of financial regulations for derivative cryptocurrency products, increased enforcement of these laws, and more recently even banning them for offering to specific customer groups (consumers mostly), there is currently no viable and secure business case to be made.
Can you please clarify to DCORP investors/community if the development so far has been slower than you expected? If so, why? I see an MVP of a platform, and a couple of partnerships. It is all building up, but seems slow. I know more people have this question and observation. To avoid the FUD, please clarify. "Unfortunate but not uncommon for a startup, pivoting and having to improvise is required. In our case this might have been amplified due to experimental technology, an ever changing regulatory landscape and very limited ways to respond to those changes.
Another factor is opportunity. In a world where beginner's mistakes in code resulted in the loss of millions, the ability to create airtight smart-contracts is an interesting skill. Our reputation of building smart-contracts that have never failed is not only interesting for DCORP but also for others. It resulted in many partnerships and recently token airdrops, creating value for DRPU and DRPS holders.
Although development progressed slower than expected, a lot was accomplished and/or is actively being developed.
On the traditional side of the development spectrum we've launched the beta version of both the VC platform and the Academy while the mobile app (Android and IOS) is being developed behind the scenes.
On the blockchain side we've developed multiple tokens including changers and burners, voting capabilities, multi purpose accounts, airdrops and the largest part of the remainder for the VC platform, including the complete funding pipeline.
Also worth mentioning is that smart-contract development is different from regular development. Besides the experimental characteristics, smart-contracts are exposed to unique security risks and once published they are immutable. We've created hundreds of unit and integration tests to make sure that the code acts as expected and investors money is not lost."
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Once viacoin's price spiked, they sold their holdings in exchange for bitcoin using 31 preloaded accounts before quickly submitting withdrawal requests to Binance. Recently, on his blog on Binance’s official site, he compiled a list of books that he recommended reading over the holidays. One of these is Blitzscaling by Reid Hoffman. CZ said that this book tells in detail how organizations of different sizes work, as well as some consequences when teams grow to different sizes. According to CZ, this was very useful for Binance when the company planned ... These may be due to human error, hardware/software failure, or intentional fraudulent conduct by employees. Systemic risk: the potential losses caused by the failure of players in the industry you operate in, which impacts all businesses in that sector. As was the case in 2008, the collapse of the Lehman Brothers had a cascading effect on worldwide financial systems. As you can see, risk ... Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today. Subscribe. Already subscribed? Log in. Article bookmarked. Find A blog post following the daily price movements of Bitcoin. Updated everyday with new price predictions, personal thoughts and trading charts. Skip to content. This Crypto Life. The crazy world of cryptocurrency – My experience. Menu Home; About; Blog; Categories; Community; Newsletter; Search; Posted on February 19, 2020 March 19, 2020 by Aztec. My daily Bitcoin analysis – Let’s see if ... Recently, on his blog on Binance’s official site, he compiled a list of books that he recommended reading over the holidays. One of these is Blitzscaling by Reid Hoffman. CZ said that this book tells in detail how organizations of different sizes work, as well as some consequences when teams grow to different sizes. According to CZ, this was very useful for Binance when the company planned ... Bitcoin: Free money for everyone? Because of the epic rise of the value of bitcoin at the end of 2017, bitcoin and crypto broke through to the masses. Millions jumped in at the top of the wave… The site has a good security record, is user-friendly, and boasts hundreds of cryptocurrencies, paired against the U.S. dollar, bitcoin, litecoin, and ethereum. Bittrex has no mobile app unfortunately and of late the exchange has been slow to add new coins and tokens. Thus, if you want to purchase many of the latest ICO tokens, you’ll need to go elsewhere – usually to Binance. Contents. 1 "The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution" by Gregory Zuckerman; 2 "The Origin of Species by Means of Natural Selection" by Charles Darwin; 3 "Bitcoin millionaires: a true story about genius, betrayal and redemption" by Ben Mezrich; 4 "The Cathedral and the Bazaar: Musings on Linux and Open Source by an Accidental Revolutionary" by Eric S. Raymond At the end of 2019, Cointelegraph collected an interesting and sometimes unexpected selection of books from people without whom the world of cryptocurrency and blockchain would be completely different. Tyler and Cameron Winklevoss, Changpeng Zhao, John McAfee, Grigory Klumov and the Cointelegraph team shared the most interesting books that they read in 2019.

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