One of the biggest disruptors in decentralized finance (DeFi) has been Uniswap, the world’s most popular decentralized exchange (DEX). In the last year, Uniswap has changed the game for crypto traders, developers and liquidity providers. Since launching, it has become a pillar of DeFi and a warning shot across the bow of big centralized exchanges (CEX) like Binance that are run the same way as the banks we’d all like to be less involved with.
CEXs still dominate the crypto trading scene, though, with most transactions still happening on them. This means that, much like a bank, the company behind the CEX controls your funds. DEXs, however, connect directly to your wallet for peer-to-peer trading on the blockchain. After years of crypto enthusiasts loudly declaring the need for decentralized exchanges, Uniswap hit the scene in 2018 and soon absorbed the demand for a reliable DEX.
Uniswap traders’ euphoria peaked in September 2020 when the exchange airdropped a surprise liquidity bomb onto its community, retroactively distributing its native token — UNI — to all traders and liquidity providers. Acting like a giant stimulus package, this injected an enormous amount of capital into the altcoin market, prompting even CEXs to jump on board as they began listing UNI at a startling and unprecedented rate.
Scams, exploits, and an ocean of rugs
Unfortunately, DEXs are not the crypto trader’s paradise they may seem. With no central team vetting projects listed on Uniswap, for example, any charlatan can create a useless token, take the money and run. It’s unsurprising, then, that Uniswap has become a haven for fraudulent projects and scams, with millions of ether (ETH) having already been stolen via elaborate schemes. These shakedowns, known as “rugs” (as in, “pulling the rug out” from under investors) have become so commonplace that they now represent the majority of Uniswap listings.
In late September, a new project called Eminence hit Uniswap. It was the latest creation of Andre Cronje, creator of the phenomenally successful Yearn Finance (YFI). Excited at the prospect of another spectacular gain, Uniswap traders bought-up enormous volumes of the unaudited project. In the feeding frenzy, though, a flash loan exploited the smart contract Eminence was running on and the hacker stole USD $15 million worth of ETH. Some lucky investors were refunded 50%, but most took heavy, irredeemable losses.
Many legitimate DeFi projects do choose to list on Uniswap because of its alignment with the ideals of decentralized finance. However, trading new projects on the exchange is a dangerous game. Without proper research (and sometimes even with it), users risk losing their entire investment in the blink of an eye. While revolutionary, Uniswap has become the Wild West of crypto, offering speculators a chance to strike it rich or suffer enormous losses. In far too many cases, it’s been the latter.
Uniswap isn’t the first successful DEX, but it takes claim as the first to build a substantial ecosystem around it. As of right now, Uniswap holds an astounding USD $2.93 billion between all of its liquidity pools, dwarfing its fellow DeFi competitors. On the other hand, though, its trading volume has dropped 50% from its peak in September. This can be partly attributed to the success of Uniswap forks like SushiSwap, but one can’t help wonder if the prevalence of scams on UniSwap, and crypto in general, has dissuaded users from trading on these open exchanges.
“Build it and they will come”… The DeFi revolution is nigh
Open, decentralized finance offers new, imaginative ways to make money without the involvement of greedy bankers and corrupt governance that were never before thought possible. Many protocols like Compound, Aave and Balancer are proven, tested gateways to the DeFi revolution. If you can navigate its complexity, DeFi can truly change the way lenders, borrowers and traders manage their money forever. But DeFi is complex and precarious for inexperienced users.
These are exciting times for crypto, but the explosion of DeFi has left many individual investors burned. Aside from the inherent difficulty of getting involved, there are dangers ranging from innocent mistakes to nefarious actors bent on stealing your cash. Experienced, savvy users can (almost) safely manage their funds and build portfolios in creative ways, but it’s tough for the average crypto user. Even Bitcoin veterans feel intimidated by DeFi’s labyrinth of smart contracts and platforms.
One of the most attractive aspects of DeFi is the ability to make money from their crypto without trading it. Much like dividends paid on company shares, no longer does ETH need to sit idly in your wallet earning diddly-squat — with DeFi, it can generate interest. In the current DeFi marketplace, though, managing your portfolio still requires daily diligence, and that can take up a lot of time. This raises the question: Is there a way to benefit from DeFi without giving away all your time, and potentially all your money, too?
Enter YIELD: a new way to do DeFi
DeFi is growing by the day (this year alone, the amount of money in DeFi has grown from USD $660 million to more than $11 billion — growth of more than 1,100%!), and it takes a lot of work to know what’s going on. New DeFi offering YIELD has realized this and so has launched an app that analyzes the market daily, allowing users to put money into any protocol all in one place. Without having to connect a wallet or any other kind of third party app, YIELD safely manages your money and determines the best APY available from among the huge range of DeFi offerings out there. There’s no need to worry about rugs, no need to worry about smart contract exploits or gas fees, and no need to worry about lost funds.
DeFi may be difficult, but making money from it doesn’t have to be. By taking a little bit of the old with the new, YIELD is taking DeFi and making it simple. Users can access the best of the ecosystem through a responsibly managed portfolio run by the YIELD team that offers high returns and experienced management. By aggregating user funds, YIELD lets individual investors benefit from opportunities that would otherwise be impossible, all while keeping funds safe and insured. This gives an advantage to all DeFi users, allowing everyone to be at the forefront of open, decentralized finance no matter how much experience they have and with significantly less risk of being scammed. This is DeFi’s next stage of evolution, putting us one step closer to the money revolution we’ve all been waiting for.