Around 2017, economically, few nations had begun to face some sort of hurdle that helped turn almost every nation’s GDP (gross domestic product) somewhat fatalistic in 2020. 2008–2009 after the “financial crisis / major recession”. Lots of prototypes were born that helped different industries. The COVID-19 (Corona Virus) pandemic kind of helped present that decentralized, open, and identifiable system. If you’re one of those who rely heavily on traditional economics (micro and macro), or if you’re not familiar with the underlying system of codes / algorithms, you may not understand why decentralized finance is growing rapidly while the economy is heading for depression. This paper examines why / how decentralized financing (DeFi) increases as the general economy progresses toward depression.
One way to see the current scenario is that because most financial institutions around the world have operated centrally, the economy is moving toward a depression. One finding is that a few economic and technological experts have stated that the current economic situation has been caused by the mismanagement of inflation targets (also underestimation) and also by the mute inflation expectations. here. In addition to the above factor, the ongoing debt ratio from 2008-09 initially in the United States and major European countries, which then spread to other Asian countries, is another factor that is believed to lead to the current scenario. Another way to look at the economic situation is the disregard for small and medium-sized businesses in terms of access to credit markets. These were the few factors seen as common among micro- and macro-level operational experts in a couple of countries. One solution to the problem is to acquire private sector stocks and bonds (also called quantitative easing of fiscal policy). Another way to resolve / try to resolve the issue is by setting up a dual currency system where the government would declare the real currency to be electronic banking reserves. It must be borne in mind that each nation operates in a unique way, so whether such solutions could be possible on the ground or not, and if so, how their implementation will vary. The following study proposes separate new infrastructure systems that can help avoid such a recurring economic situation in the future.
Here, Table 3 distinguishes the unique forms of money that have been used so far. They vary
- Private physical substitutes,
- Physical fiat,
- Electronic fiat,
- Electronic e-money,
- Non-DLT electrical substitutes
- DLT electronic replacements
What type of space was used in each type, who was on both the receiving and sending side, and last, their characteristics are mentioned. A broader perspective on operations in the inter-financial area is shown in Figure 1. Figure 1 shows the general change in banking services together with recent technology. So far, emphasis has been placed on the theoretical side of centralized finance and the urgent need for decentralized financial platforms and applications that can become as simple and straightforward as using Facebook. The image below is an image that may be a relevant potential reference.
As can be deduced from the infographics, the potential image attempts to distinguish between the Facebook scale and the Chinese DCEP and identify the similarities between the two simultaneously. All the digital symbols of the company (blue circle) mentioned below can be considered as financially and sustainably viable for the companies. Scale 1 comprises several Fiats, while Scale 2 consists of one Fiate, while Scale 3 is not compatible with the ant Fiate. The study concludes that decentralized funding will become the norm in the coming days. Just as the use of gold shifts to banknotes / coins as a currency, so does the change for a decentralized currency very soon. The following study returns Stochastic design of stochastic coins.
Mentioned model here was developed to overcome a recent scenario in which about 50% of cryptocurrency prices fell in one day. The name of the proposed model is “Stochastic model of stablecoin (i)”. A model consisting of over-collateral collateral, non-custodial sentences. The prototype system works by the speculator’s ability to solve a problem that, in return, gets leverage as a potential settlement cost. This article shows that stablecoin works stably by limiting the probabilities of large fluctuations that are limited to a certain range. It has also been suggested that price volatility is higher in a given area, which can be triggered by large fluctuations, low expectations and liquidity due to indebtedness.
Of the few prototypes mentioned above, due to the numerous open source algorithms underlying these proposed models, decentralized funding did not have much impact on the overall economy. From researching and observing positive results and converging to mass economic translation, you can expect to see many reforms in the financial sector in different countries. For more information on the latest updates to the blockchain ecosystem, visit Cousins.