Decentralized Finance, or DeFi, is the most sought-after sector of the blockchain economy, offering a near-unlimited variety of financial instruments capable of reliably mimicking or even replacing their traditional counterparts. However, the relatively slow adoption and penetration rates of DeFi, as well as the low availability of proper educational endeavors aimed at onboarding users who actually need such instruments, is leading to a dualistic situation.
On the one hand, there are countless applications in the DeFi market that give users access to its facilities and services. But on the other hand, the users themselves do not often know how to use such applications and which functions they require to effectively extract maximum yields from their investments and participation in the market.
In this article Minimax team present their vision of a ‘perfect’ decentralized finance application, one that will be both holistic in functionality and accessible to even inexperienced users.
The DeFi market is characterized by its user-oriented approach in terms of accessibility to finance. The facilities in question related to staking, yield farming, and lending. All three services in DeFi allow users to generate considerable amounts of passive income. As such, the ‘perfect’ application should give users both access to such services and the most optimal opportunities of extracting benefit from their use.
The need for a single-point access cross-blockchain hub is vital as the basis for a DeFi application. Users will thus be able to view aggregated data on exchanges, vaults and pools without having to hop between platforms and accounts. Since DeFi was conceived as an alternative to the cumbersome conventional financial system, the convenience of such an approach will allow both novice and experienced investors to see all of their market activities in a single window. Minimax.Finance is a good example of such application, which will considerably reduce loss of time and give a holistic view of yields, as well as portfolio management options.
Any activities in a financially risky environment, such as DeFi, can result in potential losses. The role of a ‘perfect’ DeFi application is to reduce the chance of such losses through automation. The algorithms and systems capable of fixing profits and placing stop loss have been available to traders for a long time. Minimax.Finance made them available for staking and lending. Stop loss for yield farming is being developed.
Automation does not only relate to stop loss or profit fixing, as it can also be applied to liquidity pool hopping, trading, lending, staking and yield farming. A holistic application would allow users to set their preferences and expectations on yields and allow the software to automatically sift through available market offerings with instant transfers or exchanges of portfolio assets.
Though automation is essential for minimizing human error, it is still the user who has to make the choice regarding the way their assets will be used. One of the options is reinvestment into the same vault in its native tokens. Another is to stake their assets in the form of stablecoins to minimize volatility risks. A third option even involves withdrawal of assets to wallets as earnings from staking rewards.
Whichever case the user prefers, the system of the application has to abide by their preferences and perform such actions automatically at minimum loss of time and profit. That is what the team is working on right now.
DeFi is not only a combination of staking and yield farming, but also the involvement of advanced algorithmic trading models. Modern algo trading entails the extensive use of trading bots that can be manually set up to trade based on specific strategies with strict acceptable profit and loss parameters.
Instead of holding assets in expectation of valuation, users can trade them on the open market during periods of heightened volatility, or deposit them into proven DeFi protocol pools for high yields during times of relative market calm. The caveat of the given approach is once again a lack of automation of the manual process of re-entering former staking, lending and farming positions across protocols, all of which entail gas fees.
The automation of the manual actions will drastically improve the efficiency of user’s investments by allowing them to profitably sell assets on market sentiment and generate passive income through staking in between price hikes.
To extract the most benefit from DeFi opportunities, users have the option of specifying select parameters for each position to implement different investment strategies within a single vault.
The given approach allows users to set limit orders for some assets across centralized exchanges while creating other limit orders for the same position. The DeFi market is not as versatile in this regard, forcing users to carry out multiple manual operations to implement several different strategies simultaneously, which takes up valuable time and attention.
Minimax.Finance application allows its users to set multiple positions within a single vault with individual parameters of take profit or stop loss for each. Such versatility, coupled with automation, would result in a seamless DeFi experience, essentially putting the user’s portfolio to work hands-free.
Returning to automation, it is necessary to mention the use of bots for instantly notifying users about any changes to their portfolios or market conditions. The dynamic nature of the DeFi market means that users have to stay abreast of all developments. That is why the use of bots tethered to the crypto-popular Telegram messenger becomes both a convenient and optimal solution from a technical point of view within the scope of a ‘perfect’ DeFi application.
It is impossible for users to remember all the parameters and APYs of the myriad protocols on the market, meaning that an automated bot has to aggregate the data and give subscribed users instant notifications about portfolio changes, or any other developments of interest. Such instant notification would allow users to save considerable time and react faster to optimize their investments.
The blockchain and its positioning as the basis for Web-3.0 means that it has to involve one-click access to any of the networks and chains constituting it. This relates to the instant transfer of assets across chains as well, effectively leveling the DeFi market accessibility frontier from any point in the blockchain industry.
Such convenience brought by a ‘perfect’ DeFi application would relieve the issues connected with the fractured nature of the blockchain environment, saving users both time and gas fees in cross-chain operations.
The ‘perfect’ DeFi application from the user’s viewpoint is one that offers an unprecedented degree of automation and convenience. To remain true to the underlying principles of the blockchain, such an application would have to alleviate issues related to financial markets, fast-tracking users on the path to an alternative economy.
Applications that would answer the image of the ideal described above have already been deployed, as illustrated by Minimax Finance, which offers its users single-click access to various protocols and asset transfers between them. The application by Minimax Finance includes many of the automation features that fit the description of a ‘perfect’ app, including aggregated protocol data and a holistic investment management interface.
As a multi-chain aggregator hub, the Minimax application acts as a smart proxy between protocols across the DeFi playing field, empowering users to manage their funds more effectively and efficiently, resulting in higher yields and minimized loss of time.