DEFI — the concatenation of “Decentralized Finance” is all the rage. In fact, it’s the primary driver behind the current crypto bull run. Sure, Bitcoin has gone on a nice run to about $12k levels, but LINK — the top DEFI coin according to CoinGecko — has gone on a crazy 1000% run in just a few months. So, what is DEFI, and what’s causing all the hype? In this article, we’re going to look at DEFI big and small, define it, and talk about how Phore will revolutionize it.
Let’s get started.
Decentralized Finance — Crash Course
Decentralized Finance is the heart of cryptocurrency. Many believe that Bitcoin itself was created as a protest to central banks and the corruption therein. In fact, the Bitcoin whitepaper was written in late 2008 just after the financial collapse that led to the Great Recession. This was caused by Banks manipulating the housing markets, leading to a bubble which unavoidably popped, and left taxpayers holding the bags while the perpetrators were bailed out. Enough was enough. Bitcoin was the first and greatest DEFI invention — a peer to peer, decentralized, anonymous, blockchain-based currency, unable to be counterfeited or controlled by any one entity. Instead, a fair and work-based method was created, allowing the “best man” to win the block reward.
DEFI is the heart of crypto, and at the heart of DEFI is liberty. Mayer Amschel Rothschild once said, “Give me control of a nation’s money, and I care not who makes its laws!” This is because if you control the money, you control everything. Control people’s livelihoods — their ability to feed themselves and their families — and you control them. By creating a decentralized currency that is free from institutional control, the opportunity for true freedom and independence was born.
In the 11+ years since Bitcoin’s release, Decentralized Finance has evolved. If Bitcoin is the “trunk” on the evolutionary tree, many new branches have come forth, each catering to their own niche. Another one of the most notable DEFI evolutions is Ethereum, which built on Bitcoin’s “store and transfer of value” proposition by adding Smart Contracts. These “Smart” contracts are similar to any other contract or agreement that you would sign, except that the terms of the contract are written in code, which is stored on the blockchain. When certain conditions are met, the code executes a particular function. With the dawn of Ethereum, money became programmable. While Bitcoin promised the elimination of middlemen, such as banks, insurance agents, and stockbrokers, Ethereum made it a reality.
But Ethereum has its limits. Just like Bitcoin, it can only support a few transactions per second. While it improved upon Bitcoin’s awful throughput by speeding up the block time from 10 minutes to 15 seconds, its inherent limitations still prevent the “mass adoption” that crypto moon boys constantly shill on Twitter. Also, the exorbitant “Gas Fees” that must be paid to do anything at all on the Ethereum blockchain are becoming less reasonable by the day. Something has to change. Scalability must be addressed. While some layer two options have been proposed, nothing has been adopted on a scale that makes a difference. More on this later.
In 2014, one year after Ethereum was invented, came the invention of DASH, known at the time as “Xcoin” and was shortly after rebranded as “Dark Coin.” A year later, it was rebranded a second time as “Dash” which is short for “Digital Cash.” DASH was a fork of the Bitcoin blockchain, which meant that it did not support smart contracts. It did, however, create the Masternode system that we all know and love today, which is in itself a form of decentralized finance. Since Masternodes comprise a decentralized network and the coins that comprise the nodes are monetary in nature, it is quite literally DEFI. DASH pioneered the Crypto Passive Income, paying users who locked a certain amount of coin collateral with mining rewards. DASH was and is still the most successful Masternode coin on the market, and has inspired thousands of copycats.
How does Phore fit into all of this?
Phore not only seeks to combine the best of both worlds — a feat that no Masternode coin has successfully done to date — it is also adding revolutionary new technology to the mix: sharding. By adding Smart Contract infrastructure to its blockchain, Phore’s value proposition becomes even wider in scope as Ethereum’s. Smart contracts have the capacity to revolutionize any industry that uses money and data in any way. Quite literally, that means that every industry is within reach to be radically transformed and streamlined by blockchain technology. In order to achieve any level of success at this, that infrastructure must be scalable. This nearly infinite level of scalability is one of the many benefits of sharding.
Phore currently rewards its loyal holders with Masternode and Stake rewards, to the tune of ~20% ROI per year. This level of returns is unheard of through traditional finance. And these gains have nothing to do with price discovery. But Synapse will implement a new network model, opting to use “validator” nodes that will take on the staking function. The collateral required to run a validator node will be approximately 1/100th a traditional Phore Masternode, but these details are yet to be determined — scripts will be created so users can set many validators up at one time. Still, the opportunity to earn a passive income will be a critical component of the ecosystem — and will perhaps be enhanced due to the lower cost of entry.