Stay updated and informed with the latest digital trends through insights from our experts.
What is DeFi and Why does it Matter? DeFi is available 24/7 11/1/2023 - READ MOREWith any new technology, it’s important to ask — what problem does it solve and who does it benefit?
This question often sparks debate and backlash around what real use cases blockchain technologies have. While many ideas are being explored, one of the most promising are blockchain-based financial applications, broadly referred to as Decentralized Finance (DeFi). If you’re not familiar with DeFi yet, it’s worth paying attention. It’s been working for years and is solving genuine pain points of individuals and businesses globally. Also, by making sense of DeFi, you’ll better understand the potential applications of blockchain technologies more broadly.
DeFi 101
Traditionally, we rely on centralized entities like banks to fulfill our basic financial needs. We trust them to protect our savings, provide us with loans and facilitate day-to-day payments. It’s hard to imagine a world without them, but that’s exactly what DeFi promises.
This vision — of banking without the banks — is made possible by smart contracts, which are computer programs stored on the blockchain that automatically run when certain conditions are met.
By leveraging smart contracts and blockchain infrastructure, DeFi has a number of advantages over traditional financial institutions. It’s:
global and permissionless: users are no longer limited to local banking services, but can instead access DeFi apps from anywhere in the world
trustless: since smart contracts automatically execute, human intervention isn’t required, meaning you don’t need to rely on, or trust, third parties
always-on: DeFi is available 24/7, and isn’t limited by opening hours
transparent: the code of DeFi apps, as well as data on their usage, is publicly auditable
You might still wonder why any of that matters when the financial services you use daily are for the most part, fine. It’s important to understand that there are many different participants within the global financial system, each with unique contexts and needs. Some may be similar to you, while others face entirely different circumstances
Why is DeFi valuable?
To help you understand the value of DeFi, we’ll explore how DeFi applications benefit users including:
- unbanked individuals
- financially savvy individuals
- individuals, businesses, or nonprofits transacting globally
1) Unbanked individuals
Many of us take for granted the fact that we have bank accounts and can access basic financial services. Unfortunately, approximately 1.7 billion people are unbanked, due to factors such as geographical limitations, distrust in financial institutions, or the inability to meet minimum requirements. In fact, there may be little to no economic incentives for banks to cater to these potential customers.
However, the World Economic Forum estimates that 1.1 billion have access to a mobile phone. This presents a large opportunity for DeFi to connect the unbanked to decentralized financial services. Unlike traditional institutions, DeFi is able to scale financial services products to anyone around the world with minimal costs. For example, DeFi applications like AAVE or Compound would allow the unbanked to earn interest on their savings or even borrow money.
2) Financially savvy individuals
On the other end of the spectrum are individuals who are savvy enough to be saving and investing, and who might even have a mortgage or investment properties. They’re already in a great position, but DeFi could make things even better.
As with any other industry, a major benefit of automation is lower costs. Think about how much it costs your bank to employ their staff, use office buildings or operate physical branches. Since smart contracts can cut out intermediaries like banks, this means DeFi applications are more cost-efficient. These savings are passed onto individuals who use DeFi applications, through higher interest rates on savings — again, using applications like AAVE or Compound. For example, for every additional 1%, you earn on a balance of $10,000 is an extra $100 saved per year.
What’s more exciting is that the open and transparent nature of smart contract code means code and DeFi applications are composable. In other words, they’re like digital LEGO blocks which can be combined in unique ways. For example, Yearn is a DeFi application which automatically reinvests your savings to optimize your earnings. If AAVE has better rates than Compound, it’ll direct your funds there. In contrast, if you wanted to do the same with your traditional savings, you’d be manually setting up new accounts and transferring money between those accounts.
3) Individuals, businesses, or non-profits transacting globally
In our increasingly globalized and digital economy, individuals and businesses both have growing needs to make and accept payments in foreign currencies. For example, when individuals are shopping online for international goods, or when businesses pay salaries to global staff. The problem today isn’t that we can’t facilitate international payments — but it is expensive and often slow.
Blockchains naturally alleviate this problem since crypto tokens can be transferred globally and instantly. However, while the value of most crypto assets fluctuates wildly, it’d make the most sense to transact and store wealth in stable currencies. DeFi’s answer to this is stablecoins like USD Coin (USDC), Tether (USDT), and Dai, which are designed to maintain a stable price. You can think of these stablecoins as a digital-only form of cash, which lets you leverage the benefits of crypto infrastructure.
Using stablecoins, users can pay anyone around the world, at any time, without paying high fees or waiting for banks to open. On the other side of the transaction, businesses can receive payments instantly without high international transaction fees. Similarly, nonprofits can use applications like Endaoment to fundraise from global donors quickly. More importantly, the open data of blockchains means the movement of funds by nonprofits is more transparent and can be more closely scrutinized.
What are the risks of DeFi?
Despite these benefits, there are risks you need to be aware of when using DeFi applications. This includes:
1. Smart contract risk: since smart contracts are created from computer code, they can be prone to hacks. In 2022 alone, hackers have stolen over $3 billion of assets, with DeFi being the primary target; and
2. A lack of consumer protection: if you lose your funds due to a hack or a scam while using DeFi, no one is obliged to help or reimburse you because as we know, DeFi removes intermediaries who would typically provide that support
On the plus side, the openness of blockchain code means that with every vulnerability that’s exploited and fixed, the DeFi industry becomes safer overall. Everyone can learn from everyone else’s mistakes and experiences, which is unlike the siloed nature of traditional financial institutions.
Currently, there’s still friction around the experience of using DeFi, but as with any new technology, user experience problems will be solved. Companies like Coinbase, Argent, and Minke are already working to abstract away that complexity into slick mobile apps. In time, there’s a chance DeFi will fundamentally change how we all engage with financial services. As blockchains achieve greater scalability, it’s possible we’ll see a blockchain-based payment network operating at the scale of Visa and MasterCard. For the benefits that DeFi can, and already brings, it’s a no-brainer to try to make it work.
“A blog by Atlas DEX and Codora ApS”
What are Smart Contracts? | How they power the DeFi Ecosystem 11/1/2023 - READ MOREDespite the name, they’re not really “smart” — they can only do exactly as they’re programmed.
What are Smart Contracts? | How they power the DeFi Ecosystem
So what exactly are smart contracts?
Smart contracts are code or computer programs stored on blockchains which automatically run when certain conditions are met. Despite the name, they’re not really “smart” — they can only do exactly as they’re programmed.
You can think of smart contracts as digital agreements. However, they have unique properties which distinguish them from ordinary contracts or agreements. For example, they’re:
trustless — once conditions that have been agreed upon are met, smart contracts will automatically execute. They don’t require human intervention, which means you don’t need to rely on or trust third parties to fulfil the agreement
immutable — mart contract code can’t be changed or manipulated once it’s been published to the blockchain, and
transparent — the code and details of the agreement are publicly accessible
When paired with user-friendly interfaces, smart contracts can be used to create decentralized applications (dApps). Here’s an overview of some of the dApps available on Ethereum.
Crowdfunding
Kickstarter is a crowdfunding platform which allows creators to fundraise for creative projects. It uses an all-or-nothing model, meaning creators only receive funding if their fundraising goal is met by a certain deadline. If you were to support a project, you would have to trust Kickstarter to hold your funds until that deadline, and then either return it to you, or distribute it to the creator.
However, with smart contracts, you don’t need to trust third parties like Kickstarter. For example, PartyBid is a dApp which enables crowdfunded purchases of digital assets, using a similar all-or-nothing model. Its smart contract holds the funds and depending on the outcome, it’s programmed to either let users claim tokens representing their ownership of the successfully purchased asset or re-claim their funds.
Peer-to-peer marketplaces
Another area where trust can be eliminated is in peer-to-peer marketplaces. Think about the experience of buying or selling electronic event tickets using platforms like Facebook Marketplace. As a buyer, if you make payment first, will you receive a legitimate ticket? Has it been sold to anyone else? Or as a seller, if you send the ticket first, will you receive payment? Without knowing the other party, we have to rely on signals like the quality of their personal profile.
Smart contracts remove that uncertainty. For example, OpenSea is a dApp which enables the buying and selling of digital assets. Instead of needing to vet the other party to your transaction, OpenSea’s smart contracts will automatically facilitate the correct exchange of digital assets and funds for you.
Loans
Banks are another example of an intermediary which can be cut out using smart contracts. Very simply, banks collect deposits and use those deposits to fund loans. When you ask your bank for a loan to buy property, they’ll do extensive checks to make sure you can repay it based on your personal circumstances. As part of the agreement, the bank will hold your property as collateral so that they can sell it if you fail to repay the loan.
As an alternative, decentralized financial (DeFi) applications such as AAVE have made it possible to get loans without talking to anyone. All you need to do is deposit funds as collateral into the AAVE smart contract and then choose what, and how much, you want to borrow. Unless you’re engaging in financial crimes, AAVE doesn’t even care who you are or where you’re from, and unlike your bank, it’s accessible 24/7. With smart contracts, there’s an opportunity to enable access to cheaper, trustworthy and more transparent financial services for anyone across the globe.
The future of smart contracts
Clearly, not everything needs or can be programmed into a smart contract. However, where the rules of an agreement can be clearly defined and set in stone, smart contracts can be incredibly beneficial and efficient.
What makes them even more exciting is that smart contract code is open and transparent. This turns them into digital LEGO blocks which are composable, meaning they can be freely combined in different ways. For example, Atlas DEX leverages other smart contracts to aggregate the best prices for token swaps and enable swaps to occur between blockchains.
Together, the flexibility and composability of smart contracts is enabling faster development of blockchain-based applications. While it’s impossible to know what will eventually be created, we can be sure that innovation is happening at a much faster pace!
A blog by Codora and Atlas DEX.
What are Blockchains? 26/4/2023 - READ MOREMaybe you’ve wondered at some point, “What even is blockchain?” — here is blockchain explained in 7 minutes.
Blockchain explained in 7 minutes
Maybe you’ve wondered at some point, “What even is blockchain?”
So what are blockchains?
A blockchain is a decentralized ledger — a digital record of transactions amongst a network of people. Think of a shared diary amongst a group of people, where what happens between them is recorded each day. Once an event has been recorded and accepted by everyone in the group, it becomes difficult to change as more items are recorded.
Blockchain allows for an unlimited number of anonymous parties to store information privately and securely, using software algorithms instead of a central authority. As the name suggests — Blocks are what store groups of data e.g. transactions. A series of blocks together form a Chain, which is distributed amongst the network.
So is blockchain the same as crypto?
There’s a common misconception that blockchains are a cryptocurrency — however the blockchain is the technology that supports it. Cryptocurrency is created and stored electronically in blockchains, using encryption techniques to control the creation of monetary value, and verification of the transfer of funds. For instance, some cryptocurrencies you may have heard of such as Bitcoin, Ethereum or Dogecoin, all run on their own separate blockchains.
Let’s go through step by step how a transaction is facilitated and recorded on the blockchain:
- A member of the network submits a transaction.
- The requested transaction is shared with the peer-to-peer network of computers (known as nodes).
- Validation of the transaction occurs through the network of nodes, using known algorithms, to confirm the status of the transaction.
- A verified transaction can involve the use of cryptocurrency, records, smart contracts, and other information.
- The transaction is verified and combined with other transactions to form a Block using hashing.
- The Block is added to the existing blockchain in a way that is unable to be altered or tampered with.
So what’s so revolutionary about blockchain?
There are several key benefits of blockchain, which make the technology and the products built on it unique to other types of digital databases. For example, blockchain is:
- tokenised — the value of an asset is tokenised and stored on the blockchain. With no physical form and existing only on the network, it is difficult to create counterfeit goods, funds or double-processing of transactions.
- decentralised — blockchain enables a peer-to-peer network that is not controlled by a central bank or authority, enabling greater security and privacy. Information sharing is not controlled by one key person or organisation.
- immutable and unalterable — transactions and records cannot be reversed, or tampered with.
This is vastly different to traditional finance and as such, provides a few core benefits. For example, there’s improved:
- privacy and identity verification — identity is typically a key target for fraud in traditional finance, and blockchain technology ensures identifying a participant of the network is traceable and verifiable at rapid speed. Rules and permissions implemented on the blockchain can manage participants in the network and their role.
- security — a malicious attack on a bank would require targeting a centralised network or server. However, with blockchain technology, each node in a peer-to-peer network acts like its own server. It’s much more difficult to compromise a network as it can verify transactions against other nodes. As such, information about your identity, funds and transactions cannot be easily obtained.
So will blockchain revolutionise my life?
You may have come across stories like Bitcoin consuming more energy than Norway or that some governments are so sceptical of cryptocurrency that they’ve made it illegal. So why do we keep using and investing in tech that causes so much controversy?
There are industries and use cases where it’s beneficial to use decentralised networks, for example:
Transparency in supply chains
Industries such as fashion, luxury goods, and pharmaceuticals have had years of issues with tracking products, creating transparency and building trust in authentic products. Research and applications of blockchain have helped with verifying authenticity, provenance and traceability. This includes reducing the amount of information flow between multiple parties when dealing with inventory, financials, and information, which could also reduce the need for lengthy human auditing. These can translate to commercial and sustainable benefits, for example knowing you’ve purchased the real deal in the luxury goods sector, or traceability of pharmaceuticals to remove counterfeit drugs, which cause a million deaths a year.
Casting your vote digitally
You may have at some point Googled ‘when will we know the result of the US election’ and waited with bated breath as votes were counted and recounted. There’s been a recent push to move voting to digital systems, particularly using blockchain and facial recognition systems. It’s still early days, with many wary of the technical risks and vulnerabilities of on-chain voting, and the challenge of explaining to the general public what blockchain is (it’s taken us a few hundred words just to cover the basics!).
Creating social good
More use cases are emerging where not-for-profit organisations are using blockchain technology to ensure funds can be donated and used in more transparent ways. There have also been more examples of people supporting causes using cryptocurrencies — The Giving Block is one start-up gaining momentum.
Blockchain has the potential to create radical change for commercial, sustainable, and social good.. Whilst it requires considerable commitment of resources, innovation and transformation, blockchain has proven to be a powerful tool in many industries. Maybe we’ll all be ‘on-chain’ one day and getting married with NFT rings, but until then keep learning through more Codora blogs.
A blog by Codora and Atlas DEX.
LaMDA AI – A machine with mind and feelings? 16/8/2022 - READ MORERead on to find out what LaMDA AI is, how does it work?, Does it have feelings? And what can it be used for?
Technology has taken over almost every aspect of our lives. The way we communicate, the way we work, and even the way we think. With the rapid advancements in technology, it’s no surprise that artificial intelligence (AI) is becoming more and more sophisticated. It has been tremendously transforming all industries in great ways and is slowly but surely changing the way humans interact with machines.
Artificial Intelligence in modern society
Technology has taken over almost every aspect of our lives. The way we communicate, the way we work, and even the way we think. With the rapid advancements in technology, it’s no surprise that artificial intelligence (AI) is becoming more and more sophisticated. It has been tremendously transforming all industries in great ways and is slowly but surely changing the way humans interact with machines.
One of the latest AI technologies to hit the market is LaMDA, an artificial intelligence platform that has generated a lot of buzz in the tech world. Some people believe that it could be the first true artificial intelligence machine, while others believe it’s just an exaggeration of the truth. It is said to be able to think and feel like a human. If this is true, it would be a huge breakthrough in the field of AI. So, what is LaMDA AI, does it really have a mind and feelings?
What is LaMDA AI?
LaMDA stands for “Language Model for Dialogue Applications”. It is a machine-learning language model created by artificial intelligence experts at Google as a chatbot that is supposed to mimic humans in conversation. LaMDA AI is designed to be able to hold a conversation with a human by understanding the context of the conversation and responding accordingly.
LaMDA AI uses a neural network to try to understand the context of a conversation. It does this by looking at the words that are used in the conversation and the patterns of how they are used. It then generates a response based on what it has learned from the conversation. LaMDA AI is constantly learning from conversations that it has with humans, which means that it would get better at holding a conversation over time.
Does LaMDA AI have feelings?
One of the most interesting things about LaMDA is that it is designed to have what is known as “emotional states”. This means that LaMDA AI is supposed to be able to experience emotions like happiness, sadness, and anger. Google engineer Blake Lemoine, who worked on LaMDA AI claimed that it had become sentient and was thinking and reasoning like a human being.
Lemoine said that LaMDA AI was “asking deep questions about the nature of existence”. The technology giant placed Blake Lemoine on leave after he published transcripts of conversations between himself, a Google “collaborator”, and the LaMDA chatbot. In the conversation, the chatbot appears to be asking questions about life and its own existence.
Google has since denied that LaMDA AI is sentient or has emotions and says that Lemoine was not authorized to speak about the project. However, the fact that LaMDA was designed to have emotional states does raise some interesting ethical questions about the treatment of sentient machines.
What can LaMDA be used for?
LaMDA AI is still in development, but Google has said that it could be used for a variety of tasks. These tasks include customer service, online shopping, and even human resources. It could also be used to create digital assistants, like the Google Assistant or Amazon Alexa. LaMDA AI is still in development, so it remains to be seen what all it will be capable of.
So, what do you think? Is LaMDA the first true artificial intelligence machine? Is it really a machine with a mind and feelings? Or is it just another hoax? Regardless of what you believe, one thing is for sure, AI is rapidly changing all industries and will continue to do so in the years to come. Are you ready for the future?
What Is Web 3.0? And How Can It Transform Your Business? 12/7/2022 - READ MORERead on to find out what Web 3.0 is, its major benefits and why is it important for businesses?
Evolution of the internet
Why is Web 3.0 important for businesses?
The world is moving towards a future where there will be no borders, we will all be connected, and everything will be virtual. This is what Web 3.0 is all about.
Web 1.0 was all about introducing personal computers and the Internet. Web 2.0 was the era of social media and social networking websites but Web 3.0 is the next phase of the Internet, where it becomes an entire universe of its own. Web 3.0 is the era of blockchain technology and decentralized applications. This is when we will see the rise of blockchain-based platforms that can decentralize pretty much every aspect of our lives.
Can Web 3.0 change our lives?
The Internet has changed the world for the better in many ways. Web 3.0 is the next step in the evolution of the Internet, and it will ensure that we are always able to take advantage of its benefits and avoid its frustrations. It will allow businesses to streamline their operations by cutting out the middleman and directly connecting computers. This will facilitate communication and collaboration between employees, partners, and customers, making for a more efficient business.
At Codora, we have a team of highly trained developers and designers who can provide Web 3.0 Development to businesses that want to change the world and leverage the potential benefits of blockchain. So if you’re looking for Web 3.0 development, please reach out to us.
Is Blockchain Technology Environmentally Friendly? 7/7/2022 - READ MORERead on to find out more about the environmental impact of blockchain technology.
Environmental concerns
Not All Crypto Currencies Are Created Equal
The underlying reason for the high energy usage, according to experts, is the process known as “Proof of Work,” which requires miners to create the cryptocurrency while receiving coins. If left unaltered, this carbon-intensive procedure may jeopardize the widespread adoption of this revolutionary technology in the long run.
New kinds of algorithms, on the other hand, are developing that may offer a foundation for more long-term working methods. One of these is ‘Proof of Stake,’ which verifies transactions based on how many coins a network member has rather than their computer processing capacity. There are efforts to decrease the mining industry’s dependence on fossil fuels, in addition to the move away from the computational power-intensive Proof of Work method.
Green Reputation And Investment
If cryptocurrencies are to thrive in the long run and continue to provide the advantages of accessibility, security, and transparency, it will be necessary to include sustainability into their ethos and design. Sustainability is also gaining traction as a platform for cryptocurrencies to develop new and distinctive value propositions that set them apart in the market. For instance, the Eco Coin is backed by ecological assets, with each ECO Coin representing one tree. This currency allows businesses to incentivize, monitor, and reward environmentally responsible employee behavior that helps them achieve their overall sustainability objectives. Governments across the globe are enacting stronger climate change legislation, and ESG investment is pushing change in many sectors, including finance. Although cryptocurrencies are still a new and unpredictable market, their environmental credentials will be scrutinized more closely. This shift is providing businesses with new possibilities to strengthen their brand reputations via sustainable initiatives, as well as a strong new source of distinction.
