The blockchain protocol Polygon announced that there is a new one DeFi-Fund. The money is to be used so that even more people can get into the young, up-and-coming financial sector.
In the April 28, 2021 blog post, Polygon, formerly known as Matic, announced it had set up a $ 150 million fund. Polygon would like to simplify access to the DeFi sector, reduce the costs and attract several million new users.
“The # DeFiforAll fund was set up to make the benefits of DeFi accessible to a larger user base who were previously unable to participate due to the high costs.”
The DeFi trading worthwhile currently only for the Whales, which are the high transaction fees the Ethereum network can afford. The high-speed blockchain protocol Polygon aims to solve this problem.
According to the blog post, some of the top Defi projects, such as Curve Finance and Aave , are already offering their products and services on the Polygon network. Thanks to the cooperation with Polygon, the costs of DeFi products can be reduced and access to them can be simplified. There are more and more DeFi providers who are looking for and want to implement Layer2 solutions and better scaling options, as the Ethereum network, which is the backbone of DeFi, is exposed to an enormous increase in demand.
Polygon explained that the average number of transactions on the Polygon network has decreased, but the number of new users has risen sharply. For example, more than 7,500 users have “locked” more than a billion US dollars to Aave within a few weeks since Aave has been operating on the polygon network.
“We have backed Aave and Curve with massive liquidity mining programs, and we hope to promote the best DeFi protocols from the DeFi Fund and bring their incredible products to the masses and incredible Polygon community.”
There are a number of problems or hurdles that affect every DeFi newcomer. One of them is the high transaction fees of the Ethereum network mentioned by Polygon. According to Etherscan, the transaction fee required to pay into a yield farming contract, for example, is currently around $ 25. Compared to the previous weeks, the transaction fee is currently even low. So it is currently not worth investing only small amounts in the DeFi sector.
Newcomers not only need a certain amount of initial capital, but also at least sufficient technical know-how about crypto. For example, newcomers first have to deal with wallets and transaction mechanisms. It would be best if DeFi applications were as easy to use as an online banking app.
Regulations and laws are also one of the biggest obstacles to the growth of the DeFi industry. Many countries require proof of identity from the exchanges if you want to trade in cryptocurrencies or convert cryptos back into fiat. Complex tax laws also prevent many people from entering the DeFi sector.
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