Decentralized finance (Defi) projects bring the hope and promise of trillions of dollars of institutional investment on the blockchain in 2020. Phillip Sandner of the Frankfurt School Blockchain Center defines Defi as follows:

"An ecosystem comprised of applications built on top of public distributed ledgers, for the facilitation of permissionless financial services" (Sandner, 2019).

Source: Https://twitter.com/Smartmen6

In short, Defi aims to decentralize traditional financial services for everyone, providing a financial service ecosystem using blockchain infrastructure. Currently, most of the Defi projects are built on the Ethereum Blockchain – it is the standard default blockchain for Defi and institutions are looking at it. Ethereum dominates with volume traded, amount of applications and user activity. Defiprime lists 208 decentralised financial institutions, 191 of them are on the Ethereum Blockchain (Defiprime, 2019).

One of the main advantages of Defi is that the user remains in control of their finances because they retain the private keys (non-custodial); in contrast, to banks and other financial institutions which must be relied on as a trusted third party. Over time reliance and confidence in banks has resulted in the loss of trust and thus the need for trustless systems has arisen. Defi proposes to decentralize the main financial use cases: Trading, lending, investment, wealth management, payments and insurance.

Currently, Defi is in the phase of innovative experimentation but this is evolving and will in the not too distant future change into professional financial enterprises due to the development of the Ethereum, Matic Sidechain layer 2 blockchain capability which solves the problems which have prevented such transformative changes. Namely; scalability issues, slow transactions, and high fees. Matic can process vastly more transaction than Visa per second; the transactions are instant due to 1 second block times, and the fees are 100 times less than on the Ethereum main blockchain. Thus integration is essential for existing Defi projects and new projects building on Ethereum. The fate of Defi has now changed due to the innovative development of the Matic sidechain which is an important part of the Ethereum blockchain.

Source: Twitter Smartmen6

Recently, Fidelity Digital Assets (FDA) an investment company that holds more than $7 trillion in client assets recently stated through its CEO, Tom Jessop, stated that the company could support Ethereum throughout 2020. Currently, the financial firm only supports Bitcoin as an asset for corporate clients (Fries, 2019). For such large financial institutions who intends to buy and sell large quantities of cryptocurrency, fees will be an important consideration. Consequently, the use of the Matic sidechain will ensure massively reduced fees on the Ethereum blockchain. Financial establishments like FDA are seeking to diversify portfolios to include more cryptocurrency, not only Bitcoin.

It is important to note that FDA is only one financial institution interested in the Ethereum Blockchain, above is mentioned another 191 who have to date only enjoyed some success, but with Matic Mainnet launching before the end of March 2020 everything changes – Matic has literally enhanced the Ethereum Blockchain to facilitate the professional operations of financial services for large corporate entities.

Although there are several promising blockchains in existence, Ethereum is still the most used and most trusted with unparallel security It is almost certain that it will continue to maintain its number 1 status into the future. In a recent article Matic elaborated the use cases for Matic (Matic Network, 2019).

In addition, a comparison chart of some other blockchains can be found at the following link. Although other blockchains are likely to succeed Matic integration on the largest and most used blockchain, Ethereum will likely dominate.

2020 is going to be an exciting year for the blockchain space. 40 new projects are currently building on Matic and will begin operations with the Matic Mainnet by the end of March 2020. Many other projects will likewise also integrate before or after Matic Mainnet. It is also conceivable that other blockchains will also integrate with the Ethereum – Matic sidechain so as to incorporate Matic’s innovative solutions to existing problems which are preventing the realization of their blockchain projects.

Source: Twitter Smartmen6

For those interested in building on or integrating with Matic, the team can be contacted at info@matic.network or through the website about page where information on the team members can be found https://matic.network/about

Links

Defiprime. (2019). Image: defiprime on Twitter: "Our take on mapping #DeFi ecosystem, v.2 .. Retrieved from https://images.app.goo.gl/9TPoTqSLJwjuHB8e7

Comparison Chart Matic Network in 2019 — https://t.me/maticnetwork/175532

Fries, T. (2019, December 15). Fidelity Digital Assets CEO: Institutional support for Ethereum could arrive in 2020. Retrieved from https://thetokenist.io/fidelity-digital-assets-ceo-institutional-support-for-ethereum-could-arrive-in-2020

Matic Network (2109) https://matic.network/usecases/

Sandner, P. (2019, December 9). Decentralized Finance (DeFi): What do you need to know? Retrieved from https://link.medium.com/XpbvZ3xLJ2