Web3 & DeFi
What is Web3?
Web3 is the new iteration of the internet that is built on top of blockchain technology. Web3 moves away from the centralized and data-driven model of web2 in favor of a decentralized and user-centric ecosystem, where data is not controlled by large corporations but rather owned and managed by individual users.
Applications built on web3 allow users to access non-custodial financial services and methods of financing that have been gatekept by traditional financial institutions, along with many other user applications such as transparent voting & governance, secure escrows and more.
What is DeFi?
DeFi (decentralized finance) is a subset of web3 that disrupts traditional financial services by leveraging blockchain technology to create decentralized financial applications (dApps). These dApps enable peer-to-peer financial transactions without the need for intermediaries like banks or brokerages. This decentralization eliminates the inefficiencies and high costs associated with traditional finance, making financial services more accessible and inclusive.
The global DeFi market is has experienced rapid growth in recent years. The total value locked (TVL) in DeFi protocols stood at around $1 billion in 2020, and lies at over $100 billion as of 2024. According to a report by MarketsandMarkets, the global DeFi market is projected to reach $27.4 billion by 2028, representing a compound annual growth rate (CAGR) of 52.1% from 2021 to 2028.
Use in HyDRAULIC
Web3 and DeFi are key elements of the HyDRAULIC ecosystem. The core HyDRAULIC protocol runs on smart contracts and leverages DeFi to the following ends:
Access to Liquidity: Traditional financing channels often exclude SMEs due to conventional requirements and risk assessments. DeFi markets provide alternative avenues for SMEs to secure funding, bypassing the traditional gatekeepers.
Digital IP Representation: Intellectual property is represented as IP NFTs that are inherently unique and traceable digital tokens. The use of NFTs for IP representation allows intellectual property to leverage the wider DeFi ecosystem for liquidity and more.
IP Marketplace: The HyDRAULIC IP marketplace is built on top of DeFi. This means that all IP-backed loans and sales are done on a publicly auditable, verifiable and trustless infrastructure. The source code for the marketplace is the source of truth, and any changes to this code are publicly visible and verifiable.
Accelerated Transaction Speed: DeFi transactions are often processed much faster than traditional financial transactions, allowing SMEs to access capital and manage their finances more efficiently. As a result, all IP loans and sales have an instant asset settlement period.
Reduced Costs: DeFi transactions typically incur lower fees compared to traditional financial services. Transferring $5 will incur similar transaction fees to transferring $5 million.
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