The Beginning of the DeFi Era and How Autonio Became a Part of It
Decentralized finance – often referred to as DeFi – refers to the shift from the traditional, centralized financial system where the influence lies on the shoulders of a central authority to a peer-to-peer network facilitated by decentralized protocols running on a blockchain network.
From lending and borrowing platforms to stablecoins and tokenized BTC, the DeFi ecosystem has established a vast network of integrated protocols and financial tools. According to Cointelegraph, the total value of assets locked in DeFi smart contracts is approximately $40 billion. Since mid-last year, DeFi has stood out as the most active sector in the blockchain space, with a wide variety of applications for individuals, developers, and institutions.
DeFi – How Did We Arrive Here?
Since the beginning of Industrial-era finance, the banking system has relied heavily on some highly capitalized institutions, law firms, and regulatory agencies to act as the primary "trust layer." Since there was no other better option, this concept was essential to insure against systemic risk. Various intermediaries like payment service providers (PSPs), third-party administrators (TPAs), clearinghouses, brokers, and claim adjusters sprout to complement this system.
However, these intermediaries led to high transactional charges and inequality in service access. In the last two decades, we have witnessed fintech companies leveraging new-age technologies to solve the above inefficiencies but with little success. Apart from reducing the time and cost of transactions, the financial world needed a solution with manifold benefits – borderless access to financial services, programmable money, real-time risk transfer, and financial contract transparency. Generally, that is what DeFi stands for, and that is how it was born.
The primary innovation of DeFi is that the "trust layer" is now blockchain technology and the code itself. Furthermore, anyone with a computer or smartphone and an internet connection can access global and transparent financial services.
Reasons Why DeFi Became Popular
DeFi leverages blockchain technology's primary principles to increase financial security and transparency, unlock liquidity and investment opportunities, and back a unified and standardized financial system. Here are the reasons why DeFi became quite popular.
Transparency. On a public blockchain, like Ethereum, all transactions are sent and verified by other users (miners) on the network. Moreover, user addresses use encrypted keys that are pseudo-anonymous.
Programmability. DeFi smart contracts automate execution and facilitate the creation of new investment opportunities and digital assets.
Immutability. The tamper-proof nature of blockchain technology increases the security and audibility of data and transactions.
Permissionless. Unlike the traditional financial system, decentralized finance is open and permissionless. Anyone with a digital wallet and an internet connection can access DeFi services.
Interoperability. Ethereum blockchain's composable software stack allows DeFi protocols and other use cases to integrate and complement each other.
How Autonio Came to Inception
Despite the potential that DeFi holds, lack of liquidity is a significant problem keeping most DeFi projects behind. Often, we see high market volatility and token prices that can be easily manipulated by relatively small capital.
While new approaches like Automated Market Makers (AMMs) aim to solve this problem, low liquidity continues to suppress the DeFi landscape at large. To make matters worse, due to decentralized exchanges discharging the responsibility of funding liquidity pools to end-users, crypto users are also exposed to financial losses when prices suddenly move too far in one direction.
The lack of liquidity and accessibility to intelligent trading tools are the main reasons why DeFi has not caught traditional businesses' attention significantly. Without the incorporation of these businesses, the DeFi ecosystem will not scale up. Moreover, DeFi will continue to remain a fringe sector, at best. Therefore, for the DeFi ecosystem to truly succeed, it must create long-term and sustainable liquidity.
Autonio Foundation was sparked by the crypto community's need to develop intelligent trading solutions that improve DeFi liquidity and help investors harness the power of the crowd and enable them to navigate the markets with profitability, privacy and ease. Among many products in the pipeline, the Foundation launched NIOX Suite to solve the technical complexity, secrecy, and exclusivity of the DeFi ecosystem. The Suite aims to provide DeFi users with smart infrastructure for engaging with crypto markets.
The NIOX Suite includes an AI infrastructure and trading tools such as:
NIOX Swarm. This is a marketplace-driven approach to market making aiming to bring consistent crowd-sourced liquidity provisions to order book-based exchanges, centralized and decentralized. It enables everyone to launch liquidity mining campaigns on order book-based exchanges by simply setting up the wanted metrics like the paring, spread, and most importantly, the reward for the liquidity sellers who will easily participate in said campaigns and earn the rewards by providing liquidity.
IMM. The IMM will tackle the problems current AMMs have, like impermanent losses through the detection of price fluctuations in real-time, stops losses, prevention of arbitrageur manipulations, and buffers from reducing any temporary loss.
NIOX Maker. This is a cost-effective market-making tool that enables users to provide liquidity and build volume for selected trading pairs with a single click. NIOX Maker enables users to mine liquidity and earn rewards, control spread, refresh rates, and price bands to optimize orders. Besides, users can start sessions in very few steps on their favorite exchanges and automate strategies of up to 38,000 orders per day. This gives anyone who doesn't have the resources an automated and emotionless edge required to be competitive on the crypto market.
SmartDEX. The smartdex is designed for secure peer-to-peer crypto trading, benefitting from intelligent features, such as integrated market making. Besides a classic order book interface that is familiar to the users of centralized exchanges, it will also host an advanced swap style interface option, which will run on the next generation IMM (Intelligent Market Maker, a step forward from the current "dumb" AMM style exchanges). It allows crypto users to trade digital assets with minimal friction and in a reliable manner.
No matter the skill or expertise, everyone is invited to take full advantage of our Smartdex today to trade faster, smarter, and safer, ensuring a great user experience along the way.
AI/ML Network. This tool will implement access to machine learning models that enhance the trading performance of our toolset. AI/ML Network is still under development, but it aims to empower the regular users with analysis tools that will give them an upgraded on-chain vision. This way, anyone will understand better the market movements and further understand its flow and dynamics.
Our vision is to build a prosperous community around algorithmic trading; therefore, all our tools are user-centric, aiming to make everything crypto-related a lot easier to understand and manage.
Our mission is to enable investors and traders to navigate crypto markets with profitability, privacy, and ease. This sparks the birth of many trading tools and solutions that enrich the everyday experience, giving the edge in a busy market populated with high-grade competitors.
DeFi is still a space of innovative experimentation instead of professional financial operations mainly because of low liquidity. Luckily, Autonio Foundation is committed to pushing the boundaries of DeFi with smart, automated trading tools and infrastructure. We are continually innovating - keep an eye on our blog for more updates.
(written by Josiah Makori; Content Writer, Autonio Foundation)