DeFi’s Growing Popularity & Rise Of Bitcoin Cash
By Shubham Joshi
Decentralised Finance or DeFi – one of the biggest subsectors in virtual digital assets (VDA) – is revving up with the investor expectations.
Its use cases in building applications for decentralized lending and borrowing as well as many other financial services is gaining popularity.
There is a simultaneous increase in the cryptocurrency business, as well as DeFi’s popularity which has grown quickly. In simple terms, DeFi allows people to access financial services such as borrowing and lending using cryptocurrency without needing a traditional bank.
Crypto’s, to some extent, have managed to side-step regulatory issues. In fact, the rising regulatory oversight are emerging as blessings in disguise.
The industry experienced peak value in 2021 of approximately $180 billion, which was locked in the several protocols still in use today. Terra-Luna’s collapse as well as implosion of FTX did impact volume and prices substantially.
Recently, during the first quarter of 2023, DeFi stood out in the market recovery. DeFi trade value increased to $29.6 billion, outperforming key asset classes such as tech stocks and commodities in terms of performance.
Decentralized applications (DApps) are becoming more prevalent, and user migration from centralized to decentralized exchanges is one of the key factors contributing to DeFi’spopularity.
Well in recent times, we have observed a lot of volatility in the overall crypto markets and the largest cryptocurrency Bitcoin, due to regulatory concerns and macro economic conditions.
Interestingly, Bitcoin Cash is the hard fork which was created in 2017 when developers disagreed on the route Bitcoin should take to address emerging issues with the blockchain.
Due to the ongoing evolution since its founding in 2017, Bitcoin cash can also serve as a dynamic environment for the deployment of smart contracts and the development of DeFiDApps on its UTXO mainchain.
BCH Bull, the recently started project, enables users to open long or hedging positions on a variety of assets, including the US dollar, bitcoin, and gold, with the aid of the AnyHedgeprotocol.
Roger Ver, a well-known Bitcoin Cash supporter and early investor in AnyHedge, said about this use case: “Allowing people to permissionlessly lock the value of their Bitcoin Cash to the price of external legacy currencies is an incredibly useful tool for people who don’t want to deal with cryptocurrency price volatility”.
The fact that each deal has a separate independent smart contract sets it apart from similar apps on Ethereum. The smart contract is initiated once two traders have reached an agreement on the terms. This eliminates centralized security risks for smart contracts.
Furthermore, the UTXO-based protocol of Bitcoin Cash prevents high transaction fees and makes the chain scalable, meaning fees don’t increase even if the transaction volume on the network increases.
BCH Bull has been in beta since October 2022, during which time it has already generated and redeemed over 3,000 smart contracts. Its growing user base can now initiate up to 90-day-long contracts at 2~3x the previous contract size, enjoying the security and scalability that Bitcoin Cash offers.
Although some turbulence still exists in DeFi and Crypto’ facing a lot of challenges which the industry must address before the increase in acceptance, the trends are fueling the optimism currently and should help build the case for Crypto as an alternate investment, analysts believe.
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