Saving in crypto and fiat is a terrible mistake, but DeFi can save the day
Data from DeFiLlama shows the overall value of this market has fallen to about $40 billion after surpassing $180 billion in total value locked last November, along with Bitcoin racing to a new all-time high of $68,700.
Experts are still optimistic about the potential of decentralized money, though. Despite the bear market, protocols are still being built rapidly, putting them in a good position for the next wave of adoption. Even though some retail investors have shied away due to the current slowdown, there are still opportunities.
The issue is that many people are making a deadly mistake when using crypto and fiat. They are allowing their money to sit in accounts that aren’t producing interest, whether their savings are expressed in US dollars or stablecoins. And considering the out-of-control rates of inflation that are currently being experienced in major nations, this practically implies that their wealth is dwindling, and their purchasing power is decreasing with each passing month.
DeFi may be the solution in this case, but it is practically hard to manually identify the finest prospects within this emerging market and guarantee that your resources are constantly allocated effectively. Even if you find yields that outperform the market, things frequently change before you get a chance to seize the opportunity.
Being a successful investor involves constant monitoring of the unpredictable cryptocurrency market. Plus, after deploying their funds to a certain protocol, traders frequently get FOMO, or a fear of missing out.
What is the solution?
Reactive liquidity is an innovative idea in DeFi. This means that cryptocurrency investors may make sure their digital assets are yielding the best returns after adjusting for risk right up until the point when those assets are required in a new situation. Investors have the option to add programmable market triggers to their liquidity, ensuring that their positions are always tracked on-chain. Liquidity is moved to the required location the instant the user-set requirements are satisfied.
This method of decentralized finance is being promoted by Mero, who contends that it can be very advantageous in the current market environment. It enables the exchange of Mero LP tokens for money that may be deposited into liquidity pools. Mero’s liquidity pools receive the auto-compounded yield from automated yield-farming techniques. Any user who owns Mero LP tokens can add market triggers or actions to their liquidity, allowing them to continue earning on Mero right up until the point when their assets are required elsewhere.
For loans on protocols like Aave and Compound, Mero currently enables market triggers, or actions, for topping up or adding new collateral. Once these loans are registered, the Mero protocol’s network of keeper bots maintains a careful check on them and quickly transfers liquidity from Mero pools, where it earns yield, to the loan’s collateral to prevent liquidations.
The team behind Mero, which was once known as Backd, claims that they were motivated by a desire to improve both the user experience and the efficiency of capital allocation in DeFi. Their strategy successfully automates the asset deployment process, ensuring that resources are constantly used as effectively as possible. They can be transferred to other projects when better chances come along or when money is needed for urgent needs.
All of this can relieve a DeFi investor of a lot of stress and free them valuable time so they can concentrate on other things.
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