DeFi is an abbreviation of the phrase decentralized finance which generally refers to the digital assets and financial smart contracts, protocols, and decentralized applications (DApps) built on Ethereum. In simpler terms, it’s financial software built on the blockchain that can be pieced together like Money Legos.
The team believe DeFi is here to stay, it is one of the biggest innovations and use cases for Cryptocurrency and Coil as it grows will be the key piece to help it become less risky! They built Coil to be a backbone collateral asset, as it will help hedge the risk currently in DeFi since it is less correlated to the moves of BTC and other cryptos.
How does COIL bridge with different from Cosmos, ICON, Matic and the other popular projects focused on interoperability?
Coil is not a bridge, but it will use other projects bridges and is connected with other projects in the cryptospace working on solutions into different ecosystems. Coil will be able to expand into many different ones and will be fully interoperable. One of the goals we have for coil is to move it into Private DeFi. The team think many projects do not see this yet, but it will be a goldmine, and the project is connected in the privacy space and will make Coil a pioneer into it as Private DeFi Collateral.
Coil is less correlated to BTC and other cryptocurrencies. It is an ideal hedge and a way to minimize risk. Other ecosystems like Polkadot, Tezos, will also have Defi. Coil will be able to bridge there and be used as a Defi Collateral asset on any of these ecosystems not just Ethereum. There are also projects like NIX that are focused on Private Defi. The project will also connect with them to bridge into private ecosystems to grow Coil in the privacy space as well.
How is this different from DAI?
Dai is built up of a basket of currencies. The problem with DAI is back in March when everything crashed, all the currencies that it uses in its basket also crashed hard, and DAI almost broke and lost its peg. So they had to add USDC a centralized and censorable stablecoin into the basket to help stabilize it. Coil is much less correlated to BTC and other cryptos. Meaning it would help hedge this risk.
Coil will not be as affected by any major crash. It is much less correlated to the general crypto markets. While it is young and growing with liquidity it is more volatile and prone to larger price movements. There is a lag factor as well as to now shock the supply. 23hrs is very short period to readjust. Think of Coil like an automated central bank. Banks needs months and months to inject and pull back liquidity, Coil needs 23 hrs. Very quick to react. Liquidity is the key hence Coil designed the Spring to incentivize it and built a CD system on top to keep that liquidity their via a penalty system. If there is massive liquidity, Coil can sustain any huge dump in any markets. It is ideal collateral asset and a stable medium of exchange once it matures.
Coil would be excellent collateral and help minimize risk of DAI. Coil is simple and works like an automated central bank. It adjusts itself every 23hrs to the supply and demand of the market. So it is able to bounce back and adjust it self to large shocks in the market unlike most other cryptos.
There are three common core issues in technology today: -scalability-security and interoperability-speed and privacy.
So, how will COIL solve these problems?
Coil will be able to bridge into many ecosystems and will be interoperable. It will also able to use the speed of those ecosystems and also their gas costs, saving costs from Ethereum. As far as privacy, not many projects are working on Private DeFi yet, but the team believe it will be a gold mine in the coming years, and they are highly connected to projects in privacy space, and Coil will be on the cutting edge of technology and be ready to move into Private Defi first.
