While DeFi has taken strides over the past years, moving to a total locked-in value of over $78 billion as of 2022 in protocols alone, its decentralization has made it impossible for investors on DeFi to invest in stocks. As stocks exist within a centralized system, this was a problem that DeFi investors assumed would continue without a solution.
Although DeFi investors have the world of cryptocurrency, NFT, and dApps at their fingertips, stocks were out of their reach. Due to this, anyone that was searching to diversify their portfolio while only using DeFi hit a wall.
Recently, DeFiChain has announced the launch of their decentralized assets, which acts as the solution to this problem. These dAssets reflect the prices of stocks, indices, and commodities on the global stock exchange from within a decentralized system. This revolutionary step is set to allow investors to diversify their portfolios while staying within the world of DeFi.
In this article, we’ll be breaking down DeFiChain’s decentralized assets, explaining what they are, and demonstrating how investors can make passive income from them. Let’s get right into it.
What are Decentralized Assets?Decentralized assets, also known as dAssets and dTokens, are tracking tokens that mirror the price of assets on the stock market. This is a decentralized system, which means that you’re not actually buying the centralized stock itself, but a decentralized replica of the stock. For example, instead of buying Tesla’s stock ticker TSLA, you would buy dTSLA.
With close mirroring of the actual stock, this mechanism allows users on DeFiChain to get access to centralized trading opinions, instantly increasing the possibility of diversification within DeFi systems. DeFiChain is currently the only blockchain that offers this feature, demonstrating the extent to which they are innovating the field.
Users are able to mint whichever decentralized asset they would like on the platform, creating a portfolio of dAssets that uses pricing oracles to keep track of the asset’s centralized price. To mint the asset they would like, users need to put up collateral, which comes in the form of a mixed investment of DFI (native token), BTC, or a stablecoin like USDC or USDT. Half of their collateral must be in DFI, while the rest can be one of the latter-mentioned coins.
The more you have stored within your DeFiChain vault, the better interest rates you’ll get on minting, helping you to earn more with this system.
Alternatively, users can access the DeFiChain DEX and buy, trade, and sell their dAssets within that system.
How Can I Obtain Decentralized Assets?On your journey to buying dAssets, the first step is to make sure that you have the native DeFiChain currency, DFI. You can buy these directly through major exchanges like Cake DeFi, Bittrex, or Kucoin.
Once you’ve got DFI, you can download the DeFiChain wallet and gain access to the DEX. Within this system, you’ll be able to use your tokens to mint the dToken of your choice via decentralized loans. Alternatively, you can buy the specific dAsset you’re looking for directly on the DEX.
Here is a full YouTube tutorial for those that want a visual guide.
Taking dAssets Passive with DeFiChainWithin a traditional system of buying stocks, once you have the stock, there are only two ways of making money:
Dividends – Some companies will pay out an annual dividend to those that hold their stocks. These dividends are typically an annualized return of around 5%, paid in quarters throughout the year. Users that are going to hold for a long time can gain passive income through these dividends.Price Rises – The second way that people make money on stocks is simply through them rising in price. If you buy an Apple stock at $100 and it rises to $120, you’ll be able to sell and make $20. This is repeatable on any scale, although it is not a passive form of income as you don’t make (or lose) anything until you decide to sell the stock.Going far beyond these known methods of earning with stocks, dAssets provide additional utility and further benefit for users. While users can hold dTokens of their choosing and treat them as traditional stocks, they also have the option of adding their tokens into a liquidity mining protocol.
Once added to these protocols, a user is set to earn additional rewards from their tokens due to helping within the mining pool. Late in 2020, DeFiChain announced these features, including the ability to enter funds into liquidity pools.
With this option, users are able to get passive rewards from their stock options while also still owning the dToken asset. This means that they’re able to benefit from price rises of the stock, just like typical options, but additionally will earn passive income from them.
DeFiChain’s system helps users make the most of their investments, getting passive income on top of the typical benefits a stock trader would receive. This decentralized option is incredibly lucrative, further demonstrating the power of this system.
Future PlansAlthough the foundations upon which DeFiChain is currently building are already comprehensive, they have future plans in the mix to further the usability of their dAssets. While their blockchain is currently based on Bitcoin, they are currently nearing the end of the development process, which will expand their system to Ethereum.
When both Bitcoin and Ethereum are covered by DeFiChain, they will have effectively covered the majority of the market, instantly bringing dAsset compatibility to millions of users around the globe. For users of DeFiChain, this bridge to Ethereum represents the ability to invest in other blockchains without having to use other exchanges.
By keeping everything within the DeFiChain application, they are able to bring utility to millions of users, expanding their product use and creating an effective cross-chain solution to investing. With this, users of DeFiChain will be able to invest in assets with ease, using either Bitcoin or Ethereum pathways.
Final ThoughtsDeFiChain represents a new step in the continual development of DeFi. While DeFi is already a system that offers a range of benefits to users, it falls short on investment opportunities within centralized stock systems.
DeFiChain acts as the solution to this problem, with their revolutionary dAssets providing a decentralized system that mirrors stocks. The additional utility of dAssets when compared to traditional stocks, as users are able to contribute them to liquidity pools, is an existing addition that will help users get more from their investments.
With comprehensive systems in place and plans for future development, we can’t wait to see what DeFiChain does next.