Over the past few years, the crypto world has gained widespread popularity. Amid worsening economic conditions, institutions and individuals are leaning towards digital assets like Bitcoin and Ethereum as alternative investments.
The outburst in the crypto industry bursts has opened the door for a new movement which facilitates decentralized lending and borrowing.
Investors can earn passive income on DeFi when they put crypto funds to any protocol’s liquidity pool.
In this article, we’ll be looking at how DeFi applications have evolved in function and features, providing increased utility, meeting their social responsibility, and generating more community rewards.
Reflection tokens are known to help projects garner loyalty from the cryptocurrency community.
It is the latest wave of DeFi tokens offering autonomous rewards to holders of a specific type of token.
On a regular basis, the rewards are reflected into the holder’s wallet, enabling them to earn passive income.
A fixed transaction fee is deducted by reflection mechanics and is disbursed to existing token holders.
Reflection mechanism allows users receive extra native tokens and is garnering massive popularity in the DeFi space.
Some tokens have embraced the charity trend to save the world from the increasing environmental and social issues combating the world at an alarming rate.
Charity protocols is ideal for projects looking to fulfill social responsibility and support the future of humanity as it channels a portion of transaction fees to charitable causes.
For example, 1% from transactions that go into the charity donation pot is deducted by the Rainbow Project. It is then sent to charitable organizations across the globe.
Such ethical projects help to relieve overwhelmed NGOs working to make the world a better place.
Automatic Liquidity Generation
A number of DeFi projects have implemented an auto-liquidity function created to grow the underlying liquidity with each buy and sell trade.
The funds pool on decentralized exchanges (DEXes) is expanded by the auto-growing liquidity feature.
For instance, Pancakeswap, providing the native token with long-term price stability. For users swapping tokens, it provides liquidity, enabling them maintain higher trading volumes and create a more substantial token.
Token Buyback Function
DeFi apps looking to make their token hyper-deflationary can take advantage of the token buyback tool.
From time to time, projects buy back a portion of coins from each transaction that they take out.
This strategy reduces the supply as well as enabling of the flight of the emergent token to achieve its moonshot potential.
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