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New Defi Gem with Anti-Manipulation Feature

New Defi Gem

March 27, 2021 | 

JOHN K MWANIKI |  0 Comments| 

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Decentralized Finance (Defi) is the most used term today in the cryptocurrency market. According to PWC analysis, 45% of financial services providers and intermediaries such as banks suffer from hackers every year. 

This is among the motivating factors for the emergence of a new DeFi gem in the crypto market. The continued dependence on traditional finance systems has exposed people to cyber-attacks and financial loss. 

Decentralized finance has become their to-go-to option for financial safety. It also addresses the challenges that come with the traditional systems. 

Why traders will always accept a new DeFi gem 

People have become accepting of decentralized finance. If you wonder why people are so willing to put their faith in a financial system based on a blockchain, here is why.

1. Increased access to financial services

For a long time, there has been inequality in the provision of financial services. We are talking about the lack of even the most basic financial services. This is often due to barriers such as status, location, wealth, and even age, to mention a few.

With every introduction of a new DeFi gem, equality is improved in the finance system. A decentralized system does not limit people.

2. Decentralization

Decentralized finance does not work like the traditional centralized system. This means there is no financial body or even government that controls it. This allows for its records to be distributed across different devices. 

It also enhances transparency in the system. Records are publicly available, even for auditing. The decentralized finance blockchain players are working to end all the challenges traditional systems face. They are very steadfast with security. More so, every new DeFi gem looks to outshine its predecessors when it comes to beefing up the security. 

Investors are looking for decentralized finance platforms that focus on the security of their investment. One way that a new DeFi gem will protect investors is by integrating an anti-manipulation feature into the platform. 

How does an anti-manipulation feature work?

Distributing rewards to liquidity providers

A new Defi gem will focus on eliminating control and manipulation by system whales. By holding large amounts of coins, they can control and manipulate the market. This is usually a problem. Such concentration of wealth among a few entities often leads to low liquidity. This is when individuals hold the coins in the accounts. This thus causes price volatility. 

Action from the whales, in this case, has an impact on the volatility of the cryptocurrency. All rewards from the traders are converted into Ethereum using the anti-manipulation feature. This happens every day.  

Liquidity providers in the crypto market are like a market maker in the forex market. They help to trade on crypto platforms by using their assets to fund a liquidity pool. The pool is the decentralized finance system's backbone. These crypto users ensure that the liquidity pools are large enough for the execution of trades. 

The one significant function of the anti-manipulation feature is providing liquidity for the market. This is to enable trade and prevent slippage. The feature ensures that every day the DeFi yield protocol per pool is converted to Ethereum.

The ETH smart contract system ensures that it converts the right amount of DYP. This way, its price is not affected by more than 2.5% or so. If there is a remaining amount in the pool, it is often carried forward to the following day. If it remains undistributed after seven days, a decision is made whether the tokens are burnt or distributed to token holders.

Security audits for smart contracts 

The other way that the feature works to end manipulation is by conducting regular security audits for smart contracts. The transactions executed in the cryptocurrency are smart contracts. They have to undergo a set of protocols before they are approved. 

Smart contracts have the advantages of accuracy, transparency, and clear communication. They also show speed, efficiency, and, most importantly, security. While they are meant to be secure, sometimes cybercriminals can manipulate the system.

This is why an audit of the smart contracts is critical. If left undetected, people can use the codes to underwrite the smart contracts' terms and protocols. Regular audits point out vulnerabilities or bugs before the contracts are open to the public. This goes a long way in maintaining the contracts' performance. They also protect the users' wallets and prevent the manipulation of the decentralized finance system.

DeFi yield farming and anti-manipulation

The anti-manipulation feature is essential when it comes to DeFi yield farming. This refers to the process by which users make more crypto using the crypto they already have. This happens when the users lend out their crypto to facilitate trade in the decentralized finance market and earn a commission.

Users are able to make money through yielding in the decentralized finance market when there is liquidity. Decentralized liquidity is critical for the building of DeFi tokens. It is also critical for the maintenance of smart contracts in the system. 

Why a new DeFi gem would be keen on eliminating manipulation and control by whales

If you look around, you might notice that any new DeFi gem getting into this trade has the anti-manipulation feature. The one way users make money from the crypto space and decentralized finance is by facilitating trade.

Illiquidity poses a threat to their assets as it often leads to volatility. The platforms can control manipulation in two ways. One is by ensuring that rewards are distributed to the liquidity providers. The other way is by conducting regular audits on smart contracts. This is to prevent and eliminate all bugs and vulnerabilities. 

Whales hold most assets at a time, and this needs control. Otherwise, they can create instability. The anti-manipulation feature has proved to be effective. It has maintained liquidity, hence trade. It has also helped the platforms to conduct continuous assessment.

The decentralized finance sector in the crypto market has great potential. Things will be even better. This is thanks to the solution to the sector's most significant challenge. That is manipulation.

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