Decentralized Finance (DeFi) has evolved over the last few years as Web3-natives sought to make financial operations from peer to peer. The hibernation of the conventional economic world due to the global pandemic meant DeFi had time to establish itself as tomorrow’s financial mediator. We don’t mean the traditional mediator here, but DeFi software development solutions that execute operations autonomously without human intervention. Such solutions can impact numerous real-world sectors in different ways, and this blog identifies the industries that will feel the immediate impact of decentralized finance applications.
The first impacts of DeFi software development will be felt by the global banking ecosystem, as decentralized finance works in a direction opposite fashion compared to traditional banking. With DeFi applications being built for almost all operations possible in the current-day banking world, including lending & borrowing, and currency exchanging, banking will be redefined in unimaginable ways.
Also, optimism among financial institutions in cryptocurrencies means decentralized finance will likely transform banking through the use of smart contract programs that lessen the time taken for transactions to complete. Platforms like MakerDAO, Aave, and Compound have already received a warm welcome among Web3 natives.
With its proximity to banking, the insurance sector will be impacted by the advent of specialized DeFi applications. These platforms can ease the process of obtaining various insurances by offering ultra-transparent and lightning-fast services during registration and claiming. Insurances provided by these platforms, so far, focus on Web3-native issues (such as digital asset theft), although real-world issues are not too distant from adoption.
Applications like Nexus Mutual, Etherisc, and Cover Protocol have emerged as the leading DeFi insurance ventures offering insurance policies for a range of Web3-native issues. Real-world insurance companies are only a few regulations away from facing competition from decentralized service providers.
DeFi software development related to real estate has been on the rise since entrepreneurs found the potential of decentralized finance in the notoriously technologically-backward real estate market. Through exclusive DeFi platforms, real estate trades can be completed fastly without the involvement of intermediaries and extensive documentation.
Some DeFi platforms come with the ability to tokenize and fractionalize ownership of estate assets that can be utilized as collateral for loans, combining multiple DeFi functionalities. Applications like Propy and RealIT enable decentralized transactions of real estate properties powered by smart contracts and cryptocurrencies.
Would DeFi Software Development Change All These Sectors Forever? What Do You Think?
DeFi solutions for crowdfunding using the Initial DEX Offering (IDO) mechanism have come a long way since their inception in 2019. These applications work in a hybrid manner by incorporating elements from their precursors Initial Coin Offerings (ICO) and Initial Exchange Offerings (IEO). IDO fundraising events are far more different than real-world IPOs, as IDOs have lesser barriers to entry.
These launchpads not only serve as fundraising tools but also help to build an initial following for a startup – a much-needed element for any venture in Web3. Multiple DeFi software solutions for crowdfunding are popular today, including DAO Maker, Polkastarter, RedKite, and BSCPad.
As one of the vital yet complex sectors in the world, the supply chain really needs the impact of DeFi software development applications. Such platforms can accelerate payments between different stakeholders to ensure products reach their intended destinations in time. Smart contracts with pre-determined terms of the agreement can aid immensely in the process.
Supply chain DeFi solutions can reduce the burden on enterprises, increase financial efficiency for small and medium-scale enterprises (SMEs), update data on-chain for easy use, and help SMEs with loan authorization. With several patents rolling around recently, we can witness the power of DeFi in the supply chain sooner than anticipated.
A seemingly unusual industry in this list, gaming has already seen the impact of decentralized finance firsthand. Suppose you wonder how Play-to-Earn (P2E) games work. These platforms allow players to earn crypto assets for completing in-game missions successfully. Some of them even allow players to earn rewards by providing liquidity for in-game tokens, which is a pioneering DeFi use case.
Numerous games including DeFi operations exist successfully today, with Axie Infinity, Aavegotchi, and Gods Unchained being well-known. These platforms utilize liquidity pools, and decentralized exchanges, which distinguish them from conventional Web3 games powered by non-fungible tokens (NFTs).
Does Any Other Sector Touches Your Mind Right Now?? Comment and Let Me Know!
Thus, we have seen which sectors could witness a large-scale impact due to DeFi software development. While some have not seen many advancements to date, others have seen remarkable changes within a short time, and inevitable changes are only a few years ahead. Suppose you are an entrepreneur doubting the ability of DeFi applications. In that case, it’s time to get rid of them and begin building your venture powered by the mechanism to gain a competitive advantage.