DeFi is an abbreviation of the phrase decentralized finance which generally refers to digital assets and financial smart contracts, protocols, and decentralized applications (DApps), most of which are built on Ethereum. In simpler terms, it’s financial software built on the blockchain that can be pieced together like Money Legos.
DeFi is increasingly becoming prominent in terms of advancing the progress that blockchain technology brings to society. In 2020 was the year of DeFi in crypto and continuing growth in 2021. The numbers are staggering. Total Value Locked (TVL) exploded in 72x from a mere $900 Million in April 2020 to now over $65 Billion. Loans outstanding were up 98x from $150 Million to almost $14.8 Billion. Monthly DEX (Decentralised Exchange) volume is up to $65 Billion. DEX Volume last 12 months is up to $410 Billion and there are now over 230 DeFi dapps, with innovative new projects announced on a daily basis. The largest projects in the space all boast impressive.
Why are DeFi projects so popular? Several reasons to consider
- Independence. A key feature of decentralized finance is its independence from governments and regulators. Powered by decentralized apps (dApps), DeFi makes its way into a wide range of simple and complex financial transactions.
- The interest of institutional investors. Today we see large banks, investment funds, and global businesses entering the market.
- Development potential. From taking out the middleman to turning basketball clips into digital coins with monetary value, DeFi prospects could be far-reaching.
- Pandemic. Covid-19 contributed to the popularity of the DeFi market, as people started seeing decentralized finance as a harbor for keeping their funds and increasing them.
However, If DeFi-based products are to become attractive to mainstream users, the builders should be able to analyze blockchain data without having to invest considerable resources in trying to make sense of highly unstructured and unstandardized data. To address this challenge Covalent provides the richest and most robust data infrastructure for the entire blockchain ecosystem. Covalent does so through a single, unified API.
Through leading indexing query solutions with multi-blockchains indexing (Ethereium, Binance Smart Chain, Polkadot, Avalanch e.g), Covalent is delivering actionable insights to investors and allows developers to allocate resources to higher utility goals within their organizations. All through the use of a single, unified API.
Covalent leverages big-data technologies to create meaning from hundreds of billions of data points, delivering actionable insights to investors and allowing developers to allocate resources to higher-utility goals within their organization. Instead of pain-stakingly sourcing data from a small handful of chains, Covalent aggregates information from across dozens of sources including nodes, chains, and data feed. The Covalent API then sources end-users with individualized data by wallet, including current and historical investment performance across all types of digital assets. Most importantly, Covalent returns this data in a rapid and consistent manner, incorporating all relevant data within one API interface.
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