Decentralized finance, or DeFi change everything about global finance. In fact, it could lead to borderless, open alternatives to just about every financial program out there – bank accounts, loans, trading, you name it. All while eliminating the need for a central authority like you’d find in traditional finance. That could be beneficial for companies, such as Tokens.com Corp. (NEO:COIN), Canaan Inc. (NASDAQ:CAN), Riot Blockchain (NASDAQ:RIOT), Marathon Digital Holdings Inc. (NASDAQ:MARA), and Coinbase Global Inc. (NASDAQ:COIN).
In addition, according to Peter Wall, head of Argo Blockchain, as quoted by Forbes, “The need for an accessible, transparent, and secure system has become increasingly apparent, with centralized entities and banks continuing to fail communities seeking trustworthy financial freedom. Decentralized finance can offer improved transparency and more robust security while replacing many of the current outdated processes which can lead to a truly decentralized and democratized financial ecosystem.”
Look at Tokens.com Corp. (NEO:COIN), for example
Tokens.com Corp., a Blockchain technology company that provides transaction processing and validation services for various digital assets that power Decentralized Finance (DeFi) applications and Non-Fungible Token (NFT) platforms, is pleased to share Part II of its letters to shareholders series regarding the Company’s business model, particularly as it relates to the blockchains that are powering opportunities in the next generation of finance.
Dear shareholders:
As part of our ongoing series from management, we’re pleased to share Part II today on the opportunity to support the next generation of finance through staking and the role played by Tokens.com. Please refer to our website to revisit past letters, including the first of this series published last week on our near zero energy consumption business model.
Part II: DeFi is the Most Exciting Thing Happening in Finance and in Blockchain
Decentralized Finance or DeFi, refers to digital platforms that allow consumers to perform financial transactions with each other without the use of banks. This is accomplished using blockchain technology. The most popular DeFi uses are lending, borrowing and trading. The sector is currently booming with over $80 billion locked in DeFi applications and, as of the end of Q1 2021, there were 1.75 million estimated users.
The advantages of using DeFi instead of traditional banks are numerous, including it being more reliable, less costly and faster than outdated banking platforms. For example, if you have ever sent money abroad via the SWIFT system that banks belong to, you are aware that it is slow and expensive. Banks dominate the borrowing and lending of capital. They charge high fees to borrow and pay near zero interest on deposits. DeFi solves these issues.
The deposit rates in DeFi are far higher than what is offered at a bank, typically reaching 8% or higher. Individuals can also borrow off these platforms instantaneously by using crypto assets as collateral. The volume and user numbers continue to grow at an astonishing pace every month as new consumer finance applications are brought to market.
What role does Tokens.com play and why?
The most popular DeFi platforms, such as Aave and Uniswap, are built on the Ethereum blockchain and require ETH, Ethereum’s digital asset, to operate. Ethereum is programmable and ideal for operating robust, next-generation apps that require high throughput like DeFi, which trades billions of dollars daily. It is this functionality that makes highly-programmable blockchains like Ethereum not only popular - but also valuable.
Blockchains like Ethereum require third parties, like Tokens.com, to validate its transactions. As such, each time a DeFi transaction occurs on Ethereum, the DeFi application pays fees to the Ethereum network, which then pays fees to transaction processors, like Tokens.com. Ethereum is currently a Proof-of-Work Blockchain (where miners validate transactions) - but is in the process of migrating to Proof-of-Stake (where staking firms like Tokens.com validate transactions).
DeFi platforms are consumer-facing financial interfaces that require blockchain technology and Crypto Stakers (the transaction processors) to operate. The blockchains act like digital highways allowing DeFi transactions to move. Crypto Stakers, like us, are the toll booths that ensure the transactions are safe and then let them proceed. Tokens.com’s service is unseen at the consumer level, but our service is the necessary infrastructure that allows transactions to occur. DeFi applications, the blockchain highway and the Crypto Stakers are intertwined and each one integral to how blockchain technology functions. This is essential to how Tokens.com generates its revenue and selects the blockchains it stakes.
How we choose which Blockchains To Stake
We have conviction that DeFi will become a trillion dollar market. Tokens.com looks at which DeFi applications are most widely used and which blockchains they are built on. We also conduct thorough due diligence before we stake a blockchain, looking at their staking returns, market cap and sponsorship. While we evaluate dozens of blockchains, we believe that Ethereum 2.0, Polkadot and Binance Coin are widely used and positioned to capitalize on the growing DeFi market.
Simply, we choose to stake blockchains that are linked to fast-growing sectors, like DeFi. DeFi is recreating the entire financial system. That’s where we see a high volume of transactions that need our services. The more transactions we process, the more revenue we earn.
We feel that despite the current volatility, the digital assets we are staking are linked to long-term growth sectors and will show greater resilience. We believe it's not about timing the market. It’s about time in the market. Our staking assets, like Ethereum 2.0, are shaping the future of finance, which is why we think they’ll also provide outsized staking returns and appreciation for our investors.
Other related developments from around the markets include:
Canaan Inc. announced its unaudited financial results for the first quarter ended March 31, 2021. Mr. Nangeng Zhang, Chairman and Chief Executive Officer of Canaan, commented, "Our financial performance improved significantly in the quarter, driven by the Bitcoin price rally, higher customer demand for quality mining machines, and our ability to ramp up mining machine production and deliveries. During the period, we improved our mining machine production yields and secured sufficient capacity for future production by forging tighter partnerships with key foundry partners and other suppliers. We also maintained our strategic focus on enhancing our R&D capabilities to augment the quality and performance of our mining machines. By leveraging our technology leadership, we have obtained a large number of pre-orders from long-term clients both at home and abroad. These preorders and the net proceeds from our registered direct offering in May have significantly enhanced our cash position, providing us with more stability as we continue to refine our supply chain management, expand our overseas presence, and accelerate the development of our other business segments, such as AI and Artificial IoT, going forward."
Riot Blockchain announced that it has completed its previously announced acquisition of Whinstone US from Northern Data. The total consideration paid in the transaction was 11.8 million shares of Riot common stock and $80 million in cash, funded with cash on the balance sheet. “The successful acquisition of Whinstone marks the most significant milestone in Riot’s history, and firmly establishes the Company as a leading Bitcoin mining platform,” said Jason Les, CEO of Riot. “With Whinstone’s preeminent infrastructure and best-in-class construction, development, and operations organization, Riot is extremely well-positioned to increase the scale and scope of its operations. We welcome the talented Whinstone employees to the Riot family, and I look forward to leading our combined team as we jointly execute upon the Company’s mission to become one of the most relevant and significant companies supporting the Bitcoin network and greater Bitcoin ecosystem.”
Marathon Digital Holdings published unaudited bitcoin production and miner installation updates. The company produced 226.6 new minted bitcoins during May 2021, increasing total bitcoin holdings to approximately 5,518 with a fair market value of approximately $203.4 million; Received approximately 16,809 S-19 Pro ASIC miners from Bitmain year to date with an additional 1,911 S-19 Pro ASIC miners currently in transit; Increased active mining fleet to approximately 17,655 miners, generating approximately 1.9 EH/s.
Coinbase Global Inc. recently announced, “Our strong Q1 2021 results reflect the strength of the crypto price cycle we entered in Q4 2020. We saw many crypto assets reach all time high prices, high levels of volatility, and increased interest across the entire crypto-economy. Crypto market capitalization reached nearly $2 trillion at the end of Q1 2021 compared to $782 billion at the end of Q4 2020. By the end of Q1, the price of Bitcoin had nearly doubled to approximately $59,000 compared to the end of 2020, and the price of Ethereum more than doubled during this same period to approximately $1,900. This market environment drove strong engagement with the Coinbase platform, reflected in retail, institutional and ecosystem partner growth across all key metrics including our Verified Users, retail Monthly Transacting Users (MTUs), Trading Volume, and Assets on Platform.”
Legal Disclaimer / Except for the historical information presented herein, matters discussed in this article contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Winning Media is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. For making specific investment decisions, readers should seek their own advice. Winning Media is only compensated for its services in the form of cash-based compensation. Pursuant to an agreement Winning Media has been paid three thousand five hundred dollars for advertising and marketing services for Tokens.com Corp. by Tokens.com Corp. We own ZERO shares of Tokens.com Corp. Please click here for full disclaimer.
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