A recent trend in the blockchain space is decentralized finance (DeFi). In its core, DeFi is conventional financial tools built on a blockchain. Everything that banks do, just without the banks.
Here's an example:
Let's say you have some real estate and you'd like to borrow money from the bank. You go to the bank, ask for a loan and put your assets (real estate) as collateral. This takes maybe a few weeks and a thousand or two in fees (excl interest).
With DeFi, you can do the same. Just without the banks, in three minutes and with a service fee of a few dollars. This is much faster and cheaper since everything is automated and you only have to talk to a computer code filled with smart contracts on Ethereum.
Comment: today, it's only possible to add digital assets as collateral, but this will change once we're able to tokenize real estate, stocks, and so on.
Now, this has gotten a lot of traction recently.
As of today, there's over $400 million worth of assets put as collateral on Ethereum to take out loans through the "banks on blockchain" applications. Smart contracts are handling all of this - there is no person or a single for-profit entity that is managing it. It's just a code filled with smart contracts that do *bleep-bloop* every time someone wants to interact with it.
Sure, currently it's mostly used by the crypto-geeks, but it's only a matter of time until it reaches to the average consumer.
And that's where Argent comes in; a mobile wallet for cryptocurrencies.
It can be somewhat complicated to use DeFi applications today, but Argent has made it extremely simple for everyone to use it.
What separates them from the ordinary wallets, is that Argent doesn't have private keys. For you, as a user, you don't ever have to deal with private keys when using Argent, while still being a non-custodian wallet. You can read more about their solution here: https://www.argent.xyz/security/
However, it's not just a wallet to buy and hold; it's also a wallet for you to interact with DeFi applications that are on the Ethereum blockchain.
I love how Argent is marketing their product, so I'm going to use their tweets to show you some of the app's functions:
Getting 10% interest on your USD valued deposits
Collaterizing your digital assets and taking out a USD valued loan (CDP)
What’s fascinating is that Argent develops none of these functions. They connected their app to the Ethereum blockchain and using applications that are running on the blockchain, developed by others. The 10% interest is by Compound.Finance protocol. Opening a CDP is by Makerdao protocol, and so on.
As they say it:
The app on your phone is just a “remote control” to help you operate your wallet. Your actual wallet is a smart contract stored on the blockchain.
And with that “remote control”, you can use other Ethereum based finance applications.
Imagine the bank app that you’re using right now. And add this:
It’s 100% only you controlling your money
There isn’t any single entity storing and analysing your data
You receive an X-XX% interest on the money that’s sitting on your account
You can take out collateralized loans in a matter of seconds, without interacting with any humans
and many more
This is how I see us using financial products in 5-10 years.
If you’d like to learn more about popular DeFi apps, click here: