At present Decentralized Finance (DeFi) is bursting with innumerable financial products, instruments, and, services. The best feature of it being inclusive of everyone from any part of the world at any time without any paperwork. It has enabled everyone to bank on the opportunity provided by financial institutions and the most epic part being no involvement of any third party being a custodian of funds or intermediary.
Decentralized Finance relies on smart contracts (self-executing contracts) on the Blockchain that uses zero human intervention thus reducing the chances of errors and, increasing efficiency. Source codes used by DeFi can be checked and audited by anyone in the world. Using smart contracts users can transact with their digital wallets, they can transfer, borrow, lend or avail of any service that a DeFi project has made available.
Decentralized Finance is becoming a lucrative option for FinTech startups with its low entry barriers as compared to legacy systems. Decentralized Finance has given back the users the control of their own funds unlike, traditional financial institutions that have control of the user’s funds.
Let’s talk about a few upcoming finance products and opportunities provided by the current Decentralized Finance (DeFi) platform.
In staking the crypto assets of a user is locked in a smart contract and in return of this activity earn more crypto assets or tokens in return. This is the decentralized version of putting in funds in a bank fixed deposit and time locking it for a period of time. Staking is an emerging investment opportunity for users to earn money on their current crypto asset holding.
Usually, the token that is staked is the Blockchain protocol’s native asset. In staking the users depositing their crypto assets in the smart contracts become validators for the DeFi protocol or Layer 1 Blockchain.
Blockchain’s following the Proof-of-stake mechanism rely on the validators for securing the protocol’s security. In return for staking their crypto assets, the users are incentivized through staking rewards.
In decentralized finance (DeFi), there are minimal restrictions on how users transfer, manage, or control their funds as everything is completely intermediary-free, paperless, and automated. In swapping users exchange their already owned crypto assets with new ones.
Token swapping is only possible through decentralized exchanges as they follow Automated Market Makers unlike, traditional exchanges. These exchanges are non-custodial and rely on liquidity provided by users through yield farming or liquidity mining. Because of decentralization, token swapping is solely governed by smart contracts.
Automated Market Makers are a part of the decentralized finance (DeFi) ecosystem, they allow permissionless trading of digital assets by scooping out liquidity from liquidity pools rather than a traditional market of buyers and sellers or from order books.
Yield farming allows users to maximize their returns. In yield farming cryptocurrencies are locked up in smart contracts i.e., liquidity pools to receive rewards in return. Also known as liquidity mining, yield farming allows farmers to earn rewards from their existing cryptocurrencies.
Keeping in mind the above concepts and understanding of decentralized finance (DeFi) let’s now talk about the YAM Finance protocol.
What is YAM Finance?
YAM Finance aims to be a fair finance platform, by the people for the people. The protocol runs with the ideology of Fair Launch, open participation, and to have an inclusive community.
Earlier YAM Finance had the rebasing or elastic supply function which was disabled by the YAM community on the 29th of December, 2020.
The elastic supply function is a mechanism where the supply of a cryptocurrency or token supply is adjusted as per an algorithm that allows controlling the price of such cryptocurrency or token. Like stablecoins, rebase tokens are generally pegged to another asset. YAM was pegged to 1 USD. To maintain the peg the rebase tokens automatically burn the token in circulation or mint new tokens.
The fair distribution method followed by YAM was inspired by YFI (the native token of Yearn Finance platform). In a fair distribution system, on staking cryptocurrencies users received a pro rata distribution of YAM each block. Before the launch of YAM, there was no pre-mining, nor any shares falling outside the purview of the prescribed rules of distribution were received by the launch team or VCs.
The fair launch form of distribution had two goals:
A. To ensure Yam was truly a community owned and governed protocol.
B. To align interests with the communities of the staked tokens, all of which had potential value and experience to add to the Yam protocol.
From YAM’s Day 1, it was launched as a fully decentralized governance protocol. The governance module of Compound was implemented which gave a hundred percent control of YAM to the YAM token holders. Thus ensuring that any improvement, changes, and updates to the protocol, and management of the treasury can only be performed with approval from YAM holders.
YAM is a community run Decentralized Autonomous Organization (DAO). It is YAM’s mission to empower people with greater economic benefits in the emerging world of decentralized fiance (DeFi) through decentralized governance and programmable finance protocol. YAM Finance has three guiding pillars that support its vision and mission:
A. Fair and Ethical Distribution.
B. Decentralized On-Chain Governance and Treasury.
C. Innovation: Unique economics with cutting edge experimentation.
Collaboration between EPNS and YAM Finance
For a decentralized governance protocol communication with the governance token holders is key for the effective functioning of the governance platform. YAM finance being a decentralized governance protocol will benefit immensely from the robust communication channel created through the EPNS protocol between YAM Finance protocol and its users.
Besides being a decentralized governance protocol, YAM Finance provides several decentralized finance services and instruments. With DeFi opportunities being time sensitive, the users can partake in these opportunities promptly with the help of real-time notifications received by them through a decentralized communication channel created on the EPNS platform.
Users of the YAM Finance platform will be able to receive updates like:
A. New proposals put forth for voting
B. Beginning of the voting process
C. Ending of the voting process
D. Update about tokens earned from their farms
E. About liquidations risks.
F. Reaching minimum collateral ratio.
The collaboration between YAM Finance and EPNS protocol will be nothing but fruitful for both the protocols and the users of the YAM Finance protocol.
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