How DeFi 2.0 is reshaping the current model and tackling the challenges of existing DeFi protocols?Image by Gerd Altmann from PixabayWhat\u2019s exciting about the crypto-verse is that it keeps reinventing itself and novel concepts emerge to tackle the shortcomings of the existing projects.DeFi (Decentralized Finance) has undergone exponential growth since summer 2020 with a Total Value Locked of $105.69 Billion, as per Defipulse.com.DeFi\u2019s steady growth in the past year can be contributed to multiple factors:a. Investors are captivated by DeFi to make profits,b. Pursue financial freedom,c. Breakaway from traditional financial institutions.Also read: Should You Invest In Stablecoins? Are They Really Stable?Many different protocols like SushiSwap, Aave, Uniswap, etc. are providing a variety of services with a few things in common like lending, liquidity pools, incentives, governance tokens, etc.But this model has shortcomings like excessive yield farming or liquidity mining. To fix these limitations, projects have made some important changes that address the pain points of the traditional model that existing DeFi projects face.This new wave is titled DeFi 2.0. So, let\u2019s dig deeper to understand what this means for the DeFi space?Since DeFi began gaining popularity in summer 2020, it has managed to attract users by rewarding them with high yields through yield farming. When tokens are launched, they need liquidity to trade in DEXs (Decentralized Exchanges) and AMMs (Automated market makers) without affecting the token\u2019s price while also attracting investors. Without significant liquidity in the protocol, there will be rapid pumps and dumps \u2014 things that aren\u2019t what investors look for in their crypto investment.Also read: Staking vs Yield Farming: What\u2019s the best way to earn passive income?But the main challenge for the DeFi protocols has been to maintain long-lasting liquidity in a sustainable way. The usual route is to allocate native tokens into the liquidity mining incentives. This\u2026<\/p>","protected":false},"excerpt":{"rendered":"
How DeFi 2.0 is reshaping the current model and tackling the challenges of existing DeFi protocols?Image by Gerd Altmann from PixabayWhat\u2019s exciting about the crypto-verse is [\u2026]<\/span><\/p>","protected":false},"author":0,"featured_media":2796,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[35],"tags":[],"_links":{"self":[{"href":"https:\/\/afluxcoin.com\/pt\/wp-json\/wp\/v2\/posts\/5642"}],"collection":[{"href":"https:\/\/afluxcoin.com\/pt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/afluxcoin.com\/pt\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/afluxcoin.com\/pt\/wp-json\/wp\/v2\/comments?post=5642"}],"version-history":[{"count":0,"href":"https:\/\/afluxcoin.com\/pt\/wp-json\/wp\/v2\/posts\/5642\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/afluxcoin.com\/pt\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/afluxcoin.com\/pt\/wp-json\/wp\/v2\/media?parent=5642"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/afluxcoin.com\/pt\/wp-json\/wp\/v2\/categories?post=5642"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/afluxcoin.com\/pt\/wp-json\/wp\/v2\/tags?post=5642"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}