SmartContracts: Revolutionizing Crypto Adoption

Smart contracts can be used for various things; this is the beauty of blockchain and its ability to adopt contracts into the blockchain. There are a certain ‘store’ of value coins with simple contracts like Bitcoin and Doge. But there are also other platforms like Ethereum, Avalanche, Binance Smart Chain which support complex SmartContracts that enable a vast majority of present-day finances, insurances and loans. Let’s touch each of these use-cases in this article.

The basics:

- A smart contract is an automatic self-executing agreement that can operate without the need of a central authority or a rent-seeking third party.

- Smart contracts cut out expensive time-consuming middle men, paperwork and traditional contracts.

- Smart contracts are thus: faster, more secure & transparent, and relies on the rule that ‘Code is Law’.

DeFi

Decentralized Finance (DeFi) has been the real utility for blockchain over the past 2 years. More and more DeFi projects appear on the blockchain. There is a lot of variety in types of DeFi tokens that exist.

DeFi utilities include, lending-protocols, derivatives, insurances, DEXs (decentralized exchanges) or a stable coin for example. DeFi is still an early ‘kid on the block’, just ramping up in the past two years, but really stepping up its game with great projects and being watched from different companies around the world. These companies will each get their piece of the pie eventually. The current total market cap of DeFi on the ERC20 blockchain is about 20 Billion USD. This is a huge chunk of all the business going on, but nothing compared to the estimated 1 quadrillion USD on the regular ‘non DeFi’ market at the moment. So, DeFi still has a lot of room to grow on the blockchain. ,Coinmarketcap has devoted a whole section of ranked ‘DeFi’ tokens on the website.

Loans

Among the realm of DeFi, loans take the top spot. There are several ways to secure a loan in smart contracts at a discount if you hold certain tokens or at a more premium price while not ‘supporting’ the underlying lending system. DeFi lending rates are documented on various ,websites and are different per coin-pair.

The top lending protocols/dApps at the moment are: Aave, Maker and Compound.

DAO

DAO stands for: Decentralized Autonomous Organization. The idea behind a DAO is establishing a company or ‘flow’ that can fully function without the need of hierarchical management. DAO’s are smart contracts that (almost always) use tokens to reward certain activities and give voting rights to the holders of them that are actively participating in the progress of its own ecosystem. DAO’s with a smart contract basically opens up the possibility to transfer funds worldwide without hassle and getting rewarded in the meantime by using it’s included smart contract. Raising funds worldwide has never been this easy.

Insurance

A smaller arm in the financial trade using blockchain is the insurance area. Insurances have been running for hundreds of years and have adapted to all technological advances throughout. By using blockchain technology companies can save a lot of time and money on analyzing and assessing certain benchmarks used in deciding which way an insurance decision can go. Not only market data can be fed into the system, also cost analyses, risk assessment and other costs/benefits can all be written on the blockchain and thus be accessed in a decentralized manner. Although there must and will always be a human aspect to it when making the final call, many hours of assessing can be saved. Smart contracts in insurance can:

- Save time and money in assessment

- Have a safer risk management system

- Streamline routine interaction with transparent triggers and immutable history

- Helps in fraud detection and prevention by analyzing data

- Fully automated claim management

- Manage health data, providing data protection, compliance, and also give appointed medical workers direct access to medical data in case it is needed

The coming years will show a lot of growth for the insurance business by using blockchain technology to its fullest.

I hope this summary of smart contract utilities that combine the financial world with the world of blockchain shows what is possible with this technology. The companies that adopt blockchain technology early will have a head start in the future of their respective industries. Here at Mandala exchange, it is our goal to provide you with accurate information and to expand your knowledge of blockchain technology. Knowledge is how we as a community can craft blockchain into our daily lives making it safer, automated, and secure.