UAE Blockchain Investment

Nowadays, it is one of the best countries to adopte and size the wealth of benefits that work towards favouring ease of doing business. The pillar of their 2021 strategy initiative has a critical eye to improve government efficiency, advanced legislation, and global entrepreneurship.

Regulation of blockchain projects is performed by the SCA (Securities and Commodities Authority). On 15 last month the commission announced that it has confirmed its first draft pertaining the digital asset regulations within the UAE.

After a call for financial and capital market entities, researchers, media, and stakeholders to provide their opinions on the draft.

The draft is available on the SCA website in English only and it is an important milestone for regulating dealing in digital assets in the UAE.

Scope of application of blockchain investment:

Any financial system needs of course money, The first shot would be to use bitcoin or Ether as the Ethereum cryptocurrency as fuel for our DeFi. Well indeed Bitcoin is decentralized money but it has very basic programmable functionalities which are not compatible with the Ethereum platform.

Ether is programable and compatible but it is highly volatile. If we are looking for building reliable financial system services that people want to use, we will need a more stable currency to operates within the system. This is where stable coins come in!

Stable coins

Stable coins are cryptocurrencies that have a direct link to real-world assets, usually the US dollar. For DeFi, we want to use a stable coin that isn't using fiat money reserves for maintaining its value. This will leads us to DAI stable coin, which is a coin that is pigged to the US dollar. It means 1 DAI = 1 US $.

Unlike other stable coins, that are linked to the reserve authority, DAI is backed by cryptocurrency collateral, which means if you deposit $1 worth of Ether, you can borrow $0.66 worth of DAI. And as soon as you want your Ether back, just pay back the DAI you borrowed and your Ether will be released. In case you don't have Ether to lock up, you can buy DAI on an exchange.

Because DAI is overcollateralized, Even if Ether's price becomes extremely volatile, The value of a lot of Ether backed in the DAI in circulation will most luckily remain the same. Which makes DAI a perfect form of money for other DeFi services.

DEX or decentralised exchange blockchain finance service

DEX operates following a set of rules or smart contracts that allow users to sell, buy or trade cryptocurrencies. Just like DAI, it resides on the Ethereum platform. When you trade on a DEX, there is no exchange operator, no signup and no identity verification and no withdraw fees, instead, the smart contract enforces the rules, executes trades, and securely handles funds when necessary. Also, unlike centralized exchange, there is no need to deposit funds into an exchange account before conducting a trade. This eliminates the major risk of exchange hacking.

Decentralised money markets

DeFi doesn't stop there, there is also what we call a Decentralised money market. Which are services that connect borrowers with lenders. There are already built Ethereum platforms for borrowing and lending debt. meaning you can lend your crypto wallet and earn crypto interest on it. Alternatively, maybe you need some money to pay the rent or buy groceries, but the only money you have is cryptocurrencies. If that's the case, you can deposit your cryptocurrencies as collateral and borrow against them. These platforms automatically connect lenders with borrowers, enforces the terms of the loans, and distribute interests. These blockchain finance platforms becomes lately very popular.

Decentralised insurance

Why insurance, because all these new financial services entailed some risks. So why not create a service that insurance my funds in case something goes wrong? Well, here comes the decentralized platforms that connect people who are willing to pay for insurance with people who insure them. Well, everything happens autonomously, without insurance companies or agents in the middle.

Review

Thus, the DeFi services work in conjunction to work with one another, making it possible to mix and match different services to create new and exciting opportunities. Kind of resembles to use lego blocks and get creative with whatever you want to build, For example, you can build the following service from different money legos starting with a service for swapping a stable coin, trade on a DEX platform, and insure them, Ask for intCount 's services for such a DeFi compounds building and creation.

Transparency || Decentralisations || Interoperability || Free for all || Flexibility

DeFi risks

Still in its infancy || Hackers exploit existing loopers to steal money || Some services are still partially centralized

C/c

To summit up, DeFi has reached its early adopter stage, and the coming years will tell if it manages to cross the mainstream adoption. There is no doubt that DeFi will radiate financial discrimination, high fees, and inefficiency in managing the funds.