The Decentralized Finance (DeFi) marketplace has witnessed exponential growth in recent times. Fueled by the need to tackle current inefficiencies in the global financial system, this growth cannot be ignored or undervalued. Whilst this rather nascent niche of the blockchain industry may not be as popular as the general Bitcoin or cryptocurrency marketplace, data suggests that the DeFi marketplace is hitting new all-time highs in both the total number of users and the total amount of digital assets locked.
According to Ethereum analytics platform, Dune Analytics, the number of DeFi assets increased by almost 10 times between May 2019 and May 2020. As at May 2020, the DeFi market space was valued at over $2 billion, with the total number of DeFi users reaching 193k and new assets exceeding 1,000 for the first time.
Interestingly, the sector has almost tripled in valuation in less than two months, confirming claims of its exponential growth. Data on DeFi Market Cap reveals that the market cap of all decentralized finance projects is closing in on $8 billion, with the total number of users nearing 250k.
At the core of its innovation, DeFi is attempting to open traditional financial services to everyone by using public distributed ledgers to provide a permissionless financial service ecosystem. Broadly speaking, several traditional financial services such as trading, margin trading, lending, wealth management, investment, and insurance will be able to run on blockchain.
As with the advent of Bitcoin and the proliferation of cryptocurrencies, multiple DeFi projects have hit the marketplace, each promising to decentralize the traditional financial industry. The nascency around the space makes it a honeypot for investors, new protocol tokens and innovations.
One of such project that is pushing the frontiers of innovation in the DeFi space is PlutusDeFi, a microcap full-stack DeFi Aggregator. PlutusDeFi integrates a number of products and DeFi applications on a single platform.
According to its website,
“Every other DEFI projects or startups are a half-step towards truly taking control away from corruptible centralized bankers and financial institutions. We are the solution to achieve a total decoupling and true sovereign wealth for everyone with our strong focus on anonymized privacy at the protocol level.”
It is not unusual for blockchain projects to make claims. However, the odds seem to be in favor of PlutusDeFi. Recently, the project reached its $1 million hard cap milestone in a private sale round and has since received a lot of interest from renowned venture capitalists, DeFi projects, and the media. In its latest round, PlutusDeFi welcomed new investors like Blockchange Capital, Ethereal Capital, Danish Choudhury, CEO of Bitcoin.com exchange, Eric Benz, CEO of Changelly, Sean Klingosum, Managing Partner at Torchlight Ventures, and Thibaut Denonain, the Head of Trading at Goldbaum & Partners, just to mention a few.
More recently, NGC Ventures became the first VC to double its investment in PlutusDeFi. Speaking on the development, Roger Lim, an NGC Venture Partner who was part of the seed round investment said: “DeFI has the potential to be an integral part of our financial system. Being so requires privacy to protect your finances from the public eye. PlutusDefi introduces privacy to DeFi and will help push greater adoption for DeFi.”
With over 4,000 projects in the blockchain space, it is not uncommon to see projects exit the market as quickly as they come in. PlutusDeFi has indicated its intention to stay in the space for a long time. To this effect, the microcap project introduced a utility token as a value capture. Users can stake into the network by holding a small amount of PLT tokens in order to access certain features.
The zero-fee model has been shown to be a largely unsustainable model. Instead of trying to reduce network fees to the barest minimum, PlutusDeFi reverts all fees back to tokens which are split into 3 pools – re-audit fund, buyback and burn, and a staking pool. This model is expected to increase the company’s staked tokens while boosting its valuation over time.
Data from the World Bank reveals that about 1.7 billion adults remain unbanked; without an account at a financial institution or through a mobile money provider. On the flip side, the level of phone penetration has continued to increase with some stats suggesting that the number of mobile devices now exceeds the current population of the world.
PlutusDeFi aims to reach the unbanked through telecom companies, providing an aggregate of decentralized financial products through telecom providers. Through partnerships and integrations with M-Pesa, Vodacom, and Lipisha, the company will be able to accept Mobile Money Credit from Mobile Money Business Accounts. Users in Africa will be able to participate in DeFi lending opportunities with a simple command such as sending a text message.
In general, the DeFi space is still quite nascent. The next few years will reveal what this niche has to offer.