Luno, South Africa’s largest crypto investment app, has added three new cryptocurrencies to invest in that are prominent in decentralised finance (DeFi).
Aave (AAVE) connects lenders and borrowers directly, without the need for intermediaries. It is one of the largest cryptocurrency lending platforms, with currently over $6 billion secured across supported blockchains.
Curve (CRV) lets investors trade stablecoins and other cryptos for lower fees. Curve has gained popularity as a liquidity provider for stablecoins like USD Coin and USDT.
MakerDAO allows investors to temporarily lock up their crypto in return for Maker’s stablecoin called Dai. It’s attracted major investors including Andreessen Horowitz, one of the world’s leading venture capital firms.
Christo de Wit, Luno’s country manager for South Africa, explains, “DeFi is an innovative, automated system that enables financial services like loans, savings, insurance or trading on public blockchains. By adding these new coins, which are prominent in the emerging world of DeFi, customers can learn more about DeFi which has the potential to change finance.
“As cryptocurrencies are more than just monetary coins and form the building blocks of a new decentralised digital economy, our customers are keen for opportunities to diversify their crypto portfolios in this innovative space.””
What is DeFi?
Cryptocurrencies reward participants in decentralised ecosystems for carrying out activities that keep the system running smoothly and securely. These decentralised ecosystems enable and facilitate different industries, from financial services to gaming.
DeFi is one of the more mature use cases for crypto technology. The number of global DeFi users was estimated at roughly 4.8 million in 2022, set to exceed 22 million users by 2028 at current growth trends. The total value locked in DeFi reached more than $52.71 billion last year.
DeFi has several use cases, the biggest to date is decentralised lending and borrowing. Collateral is used as a safeguard, much like in traditional financial services, to ensure lenders will be repaid if a borrower defaults on the loan. However, transactions in DeFi are generally automated and enforced by smart contracts. As a result, they protect both lenders and borrowers before they lose out on money.
Says de Wit, “Luno undertakes a thorough process when adding assets for customers to invest in or trade, based on standards for safety and legitimacy. Luno however does not ensure the future potential of any investment. We provide clear and unbiased content to aid an investor’s decision-making, but we tell our 12 million customers to always do their own research and exercise good judgement before investing. Due to the volatile nature of cryptocurrency, we advise clients to not invest more than they are prepared to lose.”