Crypto Academy Week 7 - Homework Post for @gbenga||Decentralized Finance Projects: The bZx Protocol
Thank you for your amazing lecture,@gbenga. I learned a lot about DeFi from your lecture. Although I have heard of DeFi before now, I did not have a grip on the details about lending, borrowing, among other aspects of the ecosystem, which you took time to explain.
To join in the homework for this week, I will be writing on DeFi and the bZx protocol, which is one of the DeFi projects I can lay hands on. Please join me as we explore.
Introduction
Decentralized Finance (DeFi) is seen as the new generation financial system. In fact, this is the digital money system that puts the owner of the money in total control over his funds. It should be noted that, unlike the centralized banking system, DeFi does not involve third party in their transactions.
DeFi leverages on open source software and compostable frameworks. On DeFi, Being a trustless and transparent ecosystem, DeFi gives access to anyone in the world to engage or utilize financial services without fear of a bridge of privacy.
For example, in Nigeria, the banking system is highly centralized in that if one gets some huge amount of money paid into his account, the economic and financial crimes commission (EFCC) would call the owner of the funds to ask questions on how he got the money.
Now, the lack of privacy in the banking system can be very embarrassing, because bad eggs in the banking system can rub people of their money.
Thus, DeFi offers the privacy and the freedom needed by everyone in the financial sector.
The bZx Protocol
The bZx protocol, formally known as b0x, is a DeFi project built on Ethereum blockchain. The idea of the project was conceived in August, 2017. The project started their marketing campaign during the ETHDenver of 2018.
It follows that the protocol’s formal whitepaper was published in February, 2018. The testnet release and launching of the mainnet was done on February and August of 2018 respectively.
Lending and Borrowing on bZx Protocol
Here, lenders and borrowers place their order through a Relayer, which when matched; the borrower receives a margin loan. In the process of the margin loans being used by the borrower, there are off-chain hunters monitoring the solvency of the borrower’s account.
In the case of possible risk on the borrowed funds, the off-chain hunters will immediately initiate a liquidity position and subsequent refund of the funds to the lender. That way, the lender will not lost his funds.
For borrowers, they are free to use the borrowed assets in a way suitable to them and this is prompted by additional funding if there arise a need to increase their collateral to take care of future liquidation.
The Protocol Native Token
The native token for the bZx protocol is BZRX. The token is used for the primary purpose of relaying with users to collect trading fees. Due to great consideration of governance, BZRX holders have the power to vote for how the future updates of the bZx protocol will look like.
Based on the volume of assets held by each holder, they can claim assets from the issuance funds of the protocol. Although this function was disabled, holders can still vote for the reactivation of it in future.
Conclusion
DeFi projects are the future of the financial sector worldwide. Thus, it is time to embrace it full and move with the trend of financial freedom, privacy, transparency and trust.
Let’s go DeFi!
Thank you for reading.
Thanks for being a part of my class and for participating in this week's assignment. I hope you learned from the class as the aim of the school is to teach and allow people to learn alongside.
Remark
It looks like if you make mention of Defi, you make mention of lending of exchanges. If you are to pioneer a Defi project, what would it be based on?
Rating 8.5
Yes, my most loved aspect of DeFi is the lending and borrowing aspect.
Thus, my number one focus if I am to pioneer a project on DeFi would be lending and borrowing. That's to ensure that everyone has access to funds in a trustless and transparent manner.