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Decentralised finance, or DeFi, cryptocurrency products have seen stratospheric growth in 2020 and represent a clear future for the digital asset industry. In this nascent stage, activity has focused almost exclusively on Ethereum-based ERC20 tokens, which excludes 70% of digital assets, including major coins such as XRP.

DeFi aims to leverage blockchain technology to allow secure transactions to take place across a wide range of functions within finance. They use something called decentralised apps, or ‘dapps’ for short. DeFi is aiming to change the very way we interact with financial services, stripping out intermediaries like banks in the loan market for example.

DeFi does not require control by a financial institution – it uses dapps to automatically manage a transaction. In the world of trading for example, it would permit buyers and sellers of a share to set their price and trade without a broker or even a formal exchange. It’s that revolutionary.

Smart contracts using DeFi have already transacted over $600 million, but this looks like just the beginning.

Building the first hybrid CeFi / DeFi exchange

Digital financial services platform Bitrue has recently announced upgrades to its existing services that will introduce the benefits of DeFi products to its existing Centralised Finance (CeFi) products. This will allow Bitrue to become the world’s first hybrid exchange, with further pushes into DeFi products planned for the future.

Bitrue’s new hybrid model aims to progressively facilitate cross-chain interaction of all major blockchains, thereby providing users with a one-stop shop for all of their coins.

The first DeFi service will be a peer-to-peer matching engine connecting borrowers and lenders, with borrowers receiving interest on the coins they add to the liquidity pool. The service is expected to launch in Q1 2021. Bitrue Financial Services will be supported through a new cryptocurrency token, Bitrue Finance Token (BFT), which will be distributed to Bitrue users starting this week and listed in mid-September.

In keeping with the spirit of DeFi, Bitrue will also be implementing upgrades to its existing loan service, starting with a move to make publicly viewable the wallets that contain collateralised funds. The increased transparency will be a step towards giving users as much power over their finances as possible.

“The inherent trustless nature of DeFi means that our users can always be 100% satisfied that they are getting fair deals,” explains Curis Wang, CEO of Bitrue. “It fits perfectly with the very reason that we started Bitrue – to provide financial services that bring equitable opportunities to all people, instead of enriching the elite few at the top. At Bitrue we have users with a wide range of backgrounds and requirements – from ordinary users who are building up nest eggs to large institutions looking to control their risk. These people all have different requirements and expectations towards cryptocurrencies, and the new capabilities we can offer as a result of this hybrid model will be able to satisfy these wide-ranging needs.”

This is still a frontier area of finance, so investors and lenders will need to be cautious which dapps they are making use of. The entry levels for developers are still very low and there are sure to be a few rogue dapps out there. We are following the likes of Augur, for example, which is a decentralised market predicition protocol, and Synthetix, which lets you create and exchange synthetic versions of commodities like gold or silver.

We will be revisiting the world of DeFi in the near future, as we think there are some profound and pioneering developments here which will help to transform the face of modern finance.


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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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