Decentralized Finance On EOS Is On The Rise

Preface

DeFi is an open and global financial system built for the internet age – an alternative to a system that's opaque, tightly controlled, and held together by decades-old infrastructure and processes. It gives you control and visibility over your money. It gives you exposure to global markets and alternatives to your local currency or banking options. - [ethereum.org]

By that definition then it is safe to conclude that Bitcoin was the world’s first DeFi product when it launched back in 2009. A decade later, in 2018, decentralized finance became a blockchain craze with the invention of new and innovative DeFi platforms that were running on a cheaper, faster, and more versatile blockchain network.

Some of the leading selling points for DeFi is that it is permissionless, it cuts out intermediaries (middleman) such as banks who usually charge high fees for their services, and it transcends sovereign borders. Which means it enables people to gain access to financial opportunities from anywhere and with anyone in the world with minimal friction.

DeFi, and the innovative platforms built around facilitating decentralized finance, has become such a big sector in the world of blockchains because of its ability to create income generating schemes. Tied with the earlier mentioned benefits, this has made DeFi a much preferred alternative to traditional financial services for millions of investors around the world. As such, it plays a vital role in the prosperity of a thriving blockchain ecosystem.

DeFi on EOS

Last year the EOS Network Foundation (ENF) established an EOS working group called Yield+ that would focus on developing the EOS DeFi ecosystem, growing the amount of total value locked in EOS DeFi, and increasing opportunities for users to earn yield off of their EOS assets. Sponsored by the ENF, this working group initially consisted of EOS Nation, Greymass, UX Network, Defibox, Joe Louis, Pizza DeFi, and EOS Asia.

In May 2022, Yield+ published its much anticipated Blue Paper proposing a Liquidity Rewards program to incentivize economic growth for EOS. This, they hoped, would help bring EOS to the forefront of DeFi (Decentralized Finance), a sector that is widely considered as the driving force for economic growth on a blockchain network.

The Yield+ incentive program eventually launched a pilot phase (Phase 1) in August 2022 for DeFi protocols that meet the minimum requirement of 200,000 EOS in TVL (total value locked) to earn daily rewards at a rate of 1% APR. The next phase followed a few weeks later in October 2022 with a much improved yield of 5% APR.

“The launch of the Yield+ Incentive program marks a major milestone that increases opportunities for dApp developers to be rewarded, and EOS users to earn yield on the EOS mainnet. A method that directly measures and rewards increased economic activity on EOS can attract and retain interest in the entire ecosystem, and the Yield+ team is about to deliver on that goal!” - EOS Network Foundation

[Courtesy of https://tokenyield.io/overview]

And deliver they have. Five months later, the TVL on Yield+ has more than doubled from its low of $14 million (currently $29 million), $10 million of which came just in the last two months. The program's number of participants also grew to 14 from its initial 11 protocols at launch. All this growth has been in spite of the bear market which saw the EOS token price drop from $1,49 at the time, to under $1,00 for much of the last quarter of 2022.

A growing sector within EOS

Perhaps related to EOS’ strong market cap performance during the bear market, EOS’ DeFi metrics have also outperformed in the blockchain industry. Over the last month the TVL on EOS has outperformed the likes of Ethereum, Solana, and other growing ecosystems such as Fantom by great margins percentage wise.

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Over the last five months some DeFi protocols participating in the Yield+ incentive program have introduced new and innovative ways to encourage their users to play a part in the process. This has created more opportunities for DeFi users and EOS token holders to earn yield off of their EOS assets. Certainly a much higher yield than what has been previously offered from the EOS Resource Exchange (REX), and a lot less of a risk than trying to earn yield from centralized platforms.

The impressive performance metrics of the Yield+ program and by extension EOS DeFi have yet to be picked up by media sources in the industry. Probably because the program is still fairly new and performance metrics such as TVL aren’t things the media generally focuses on. But strong market cap and TVL performances create more avenues for EOS to stick out to anyone who gives the industry enough attention to do some research.

EOS stakeholders, on the other hand, are well aware of the advancements in the EOS ecosystem. The growing DeFi metrics are one sign of continued investment into the growth and success of the EOS network, and suggest a growing awareness of its developments. Just recently, the ENF Director and CEO announced further investment into the Yield+ incentive program.

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Afterword

It is not yet clear what the 300,000 EOS contribution to the Yield+ program will entail, but suggests that some kind of improvement(s) will be made.

Perhaps the funds will be used to offer a higher APR rate or used to fund further research into how the program can be grown further for an even bigger impact.

An impact that would lead to further growth of the entire decentralized finance sector on the EOS blockchain.

Something I hope will be clarified in the next couple of days.

Sources

● Yield+ Blue Paper proposes a Liquidity Rewards Program for the EOS Network

● Launch of the Yield+ Incentive Program Is Imminent

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