By utilizing cryptocurrencies and automated protocols on blockchains decentralized Finance (DeFi) seeks to replicate already established financial institutions like banks and exchanges.
DeFi offers the same services as the traditional financial system, including the ability to exchange assets, earn interest, borrow money, lend it out, and insure them. However, compared to conventional finance, DeFi is decentralized, quicker, and more reliable.
DeFi is of uttermost relevance to networks built on blockchains, and Tezos — an open-source ever-evolving blockchain network backed by a global community of developers, validators, and researchers have taken keen advantage of this by incorporating a cache of DeFi projects to assist in addressing the major impediments confronting blockchain adoption and applications.
Tezos’ Proof-of-Stake consensus mechanism makes it a haven for DeFi projects to thrive as it is a perfect substitute platform for creating blockchain applications that are environmentally friendly because it operates with substantially less energy and expense.
DeFi on Tezos
Tezos has a rapidly expanding DeFi ecosystem, at the moment there are about 20 DeFi projects that are live on Tezos including Wrap — a decentralized bridge between Ethereum and Tezos, SexP — a synthetic exchange project, Quipuswap — an open-source AMM protocol that facilitates the seamless exchange of Tezos tokens, Plenty — an AMM and yield farm, Instaraise — a decentralized IDO platform and lots more.
Nevertheless, to fully realize the potential of DeFi in any blockchain ecosystem, it must offer sufficient liquidity. Although finding that liquidity might prove to be a daunting task due to the many issues associated with liquidity provision principal of them being impermanent loss.
What is Impermanent Loss?
Impermanent loss is regarded as the most common risk that liquidy provides face. It occurs when liquidity providers lose the actual value of their funds when they lock them up in liquidity pools as a result of the volatility of the trading pairs.
It is termed “ impermanent loss” because the loss is only permanent when the liquidity provider chooses to unlock or remove their funds from the liquidity pool.
This has been a major deterrent to many who intend to provide liquidity as there is no insurance that they will get any benefit from providing liquidity.
InstaDEX: A next-level solution
Built on Tezos by Instaraise, InstaDEX is a unique single-asset liquidity provisioning decentralized exchange with impermanent loss insurance.
By varying the risk of impermanent loss across a wide range of pools, the Instaraise team has succeeded in building a system where the payment from exchange fees surpasses the cost of insuring against impermanent losses.
The ability to provide liquidity with just a single asset (Single asset liquidity provision) is another distinctive yet essential feature of InstaDEX as users do not need to add both tokens to the pool in order to offer liquidity. Instead, they may offer liquidity with just one token.
As a result of these features and lots more, InstaDEX is set on a path to redefine the entire DeFi ecosystem in the Tezos blockchain.
Built on the Tezos ecosystem, Instaraise is the first decentralized IDO platform that supports projects by allowing token distribution through decentralized and interoperable fundraising.
InstaDEX enables both DeFi projects and retail investors to raise money and securely invest in a fully democratic, decentralized, and transparent manner.
Instaraise is Tezos’ first decentralized IDO platform, empowering projects by allocating tokens through auctions. The platform makes it possible for projects to raise funds in a decentralized and interoperable manner.
The Instarise team can assist you with ideation and mentorship if you’re a project builder. For more information and collaboration, you can contact the CEO and co-founder — Dibyo Majumder Via Email at: email@example.com