Beyond the Elon tweets and the promise of massive profits that is drawing more people than ever into the world of crypto there is something else brewing literally under the surface of the blockchains. While most would know about Bitcoin, Dogecoin or Ethereum there has been an explosion of applications that sit on-top of and leverage blockchain technology that has facilitated the growing rise of Web3… this is Decentralized Finance or DeFi.
DeFi is a collective term for financial products and services that are accessible to anyone with an internet connection. With DeFi, the markets are always open and there are no centralized authorities who can block payments or deny you access to anything. Services that were previously slow and at risk of human error are automatic and safer now that they’re handled by code that anyone can inspect and scrutinize.
DeFi has boomed in the last eight or so months and together with the latest crypto bull run has seen the potential for people to build wealth skyrocket… and while many have seen big returns on investment in DeFi applications there has also been significant losses. This is a wild new world were the very nature of its biggest draw card, also represents its biggest problem.
dApps, Scams and Ponzi’s
DApps are the Decentralized Applications that power DeFi. A DApp is similar to a traditional web application were the front end uses the same technology to power the web application, but the backend is based on different technology than traditional database powered internet apps. Instead of an API connecting to a database, there is a Smart Contract connecting to a supporting Blockchain. They don’t require human intervention, or a centralized database, to function or to manage user data.
While every single DeFi project is positioned as a business, like everything in life there is the opportunity for scammers to take hold and in reality, having been into Smart Chains like Binance and Polygon/Matic for a number of months now, the reality of it is that 99% of the projects are actually more like pump and dump ponzi schemes that are in play to trap people into gambling their investments away and to profit the developers and seasoned crypto players who know when to get in…and when to get out!
With that in mind, that use case beyond pump and dumps and get rich quick scams is what is really exciting about this new world. Even though most project exist to simply profit a few, there are a number of applications that offer true utility. If you think about this in parallels with the original World Wide Web… it was also a wild west situation before being harnessed for it’s own utility which has fuelled the internet since… in the DeFi/Web3 space, the trick is finding that utility
Notice: The following is not investment advice. I may have investments in the utility tokens that are mentioned, the following is for informational purposes only.
Understanding a little about DeFi, I wanted to highlight three projects that offer examples of true utility. That is to say that they have been created with longevity and and purpose in mind… or to solve problems. As a technologist, this is the exciting part of the current crypto world. Companies doing things against the grain… in the examples below we have a Decentralized Exchange (DEX), a new social media platform and a web application to help investors track token activity.
PancakeSwap is a DEX built on Binance Smart Chain. PancakeSwap is a fork of SushiSwap and has an almost identical codebase which is common in this world as almost all project are open-source with their source code accessible. It has the advantage of cheaper and faster transactions from being built on BSC. It also offers common extras like yield farming, lotteries and initial farm offerings (IFO).
At the time of PancakeSwap’s launch, Ethereum was suffering from expensive and slow transactions as DeFi’s mainstream moment in 2020 drove massive demand for transactions. Almost all DeFi applications lived on Ethereum at the time.
PancakeSwap offers a low swap fee of 0.2% compared to the industry standard is 0.3% which allowed it to capture a good chunk of the DEX market. It saw quick growth in both trading volume and total value locked (TVL). It became one of the industry’s largest decentralized exchanges. Its native token is $CAKE, and launched at a price of around $1.37, dropping to $0.25 and saw its highest mark reaching just under $44 and has now settled to the $13-$18 mark due to various market conditions.
The utility of PancakeSwap was the exchange platform it offered with the lower fees and that is reflected in its strong utility token.
While the VOYR platform hasn’t launched yet, it is probably the DeFi project that I am most excited about as it is a true example of a utility token. As I mentioned above, all DeFi project are considered businesses, but few are actually backed by real corporations and what is terms Doxxed owners.
VOYR is one of the first decentralized content platforms for creators, artists, musicians, celebrities, and fans. It integrates blockchain functionality into a comprehensive ecosystem with unique interactive features and monetizing tools for the creators. The VOYR platform provides a completely new level of interaction for all participants and provides a mechanism for monetizing every aspect of it.
The native token is $VOYRME token and was launched in June. The really interesting part about this was the there was a pre-sale event which was run for friends and family which allowed people to buy into the project before the fair market launch on PancakeSwap. There was even a vesting mechanism built into the smart contract to ensure that bots and whales couldn’t impact launch price too much. This made it feel like a true early stage startup and is a great example of boot-strap funding with crypto tokens. The price of the token has taken a hit since release, but again this is due to market forces and represents a brilliant opportunity to be part of a DeFi project that is looking to make a difference and has a set plan in mind.
For more on VORY, have a listen to myself interviewing its CEO, Dave Siles on Great Things with Great Tech.
The last utility project I want to highlight is MoonArch. As I was getting into the Binance Smart Chain DeFi world, it was clear that tokens/projects were springing up almost hourly… and at the time there was really nothing substantial that showed what was happening in real time. MoonArch popped up and straight away got a small cult following (which is important also in this space) which allowed the project’s utility token to gain some early momentum.
Moonarch.app provides multiple tools to BSC traders. “Top gainers” lists the tokens that gained the most value recently, along with their market cap, liquidity and links to BscScan, Chart, Swap. “Token events” lists the last tokens made tradable on PancakeSwap. “Wallet” lists the tokens in the user’s wallet, along with their recent evolution, their price and the wallet total worth. “Whale watch” allows to add addresses and follow their transactions in real-time to copy their moves.
Again, what was important for me here in determining true utility in how useful I found the tool. While in Alpha, all the features of the application were unlocked, meaning you could track top gainer price movements across multiple time intervals which gave a brilliant overview of how certain tokens were performing. It also was able to be used to learn patterns and determine if projects were in fact pump and dump scams. It also connected to your wallet to show what your portfolio was doing in real time from a trend point of view, and also allows you to add known Whale Wallets to see what they are transacting in… again, a unique feature that added value.
Its native token is $MOONARCH, and has again suffered with the prevailing market conditions since launch, but has been able to remain steady of late and again has potential to remain viable as the developers continue to release features on the application.
For all the DeFi projects across a number of smart chains, each one has an associated token. There’s a utility token that allows you to interact and drive value from that platform. While the blockchains the operating system, the tokens are akin to a web browser, which can have web apps inside the browser. While the majority of what we are seeing in this wild west early days of DeFi are scams, there are a number of these projects that has a purpose and also has an associated utility token that you can trade, and that you can operate with inside of that project.
While your traditional crypto like Bitcoin is a store of value there is a wave of innovation happening and new value being created within the smart chains… again the technologist in me is excited and always on the look out for the next project offering true utility!
To support this article and blog: Binance Smart Chain (BEP20) Wallet Address can be donated to: 0x7eA893d1c577131C824553b25361a10320b40499