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- 1 ESMA has announced a report stating that decentralized finance has surfaced risks in the European financial sector.
- 2 Uniswap, a decentralized exchange app, has developed an exchange wallet for the iOS and Android Play Stores.
European regulators went ahead and announced the risks that the DeFi ecosystem poses to the financial industry in a report announced on October 13. They reported the risk that DeFi is surfacing in the European financial sector; they highlighted this so they have to control DeFi, whose price has been stagnant the whole week.
Moreover, this week there was a launch of the Uniswap Android wallet in the Google Play Store. The app attracted both iOS users and desktop users. Additionally, DeFi platform Star Arena recovered over 90% of the stolen Avalance (AVAX) tokens; this was after publishing a bounty of $250,000.
We will be discussing this information. Read on to understand the kind of risks that European regulators are stating that DeFi is posing to their finances and how the Uniswap wallet will aid cryptocurrency storage on Android.
DeFi Associated Risks
Decentralized Finance is a crypto-exchanging wallet that allows crypto-based transactions and financial services to be conducted through the DeFi organization. It is an innovative wallet that is not controlled by a centralized authority. But currently, DeFi poses a potential risk to the European financial sector. European regulators managed to publish an announcement stating the risks that DeFi is surfacing.
On the 13th of October, the European Regulators announced a report stating that although the DeFi ecosystem has a bright future for the financial sector, the decentralized ecosystem poses some greater risks to the financial sector. The report highlighted the benefits of transaction speed, development and innovation of financial products, security, and cost. Although it has these benefits, there are also greater risks.
The European Security and Market Authority (ESMA) stated that the first risk that DeFi brings is its liquidity. DeFi being in the crypto ecosystem brings volatility and high speculative. All crypto is volatile; furthermore, ESMA went ahead and compared Bitcoin and Ethereum volatility with the Euro stock indices. However, it managed to come out with the results; BTC showed a liquidity of 3.6 times higher and ETH showed a liquidity of 4.7 times higher than the Euro stock index.
Additionally, the report stated that the DeFi ecosystem lacks some protocols. Cryptocurrencies are vulnerable and easily attacked by scammers; moreover, in DeFi, there are some illicit activities. ESMA reported that DeFi lacks the KYC (Know Your Customer) protocol. This poses a threat to the financial sector. Besides, ESMA is not convinced that DeFi has the ability to handle counterparty risks; although the system has a smart contract, they don’t believe a smart contract can handle errors in DeFi.
ESMA reports concluded that due to the small size of cryptocurrencies, they do not pose a meaningful risk to financial stability. The DeFi tokens have had a rough week since the 13th of October; they have been trading slightly higher than the previous week but some of the tokens have been trading in the same range.
Uniswap Launches Android Wallet
Uniswap has joined 1inch to launch its wallet on Android and Apple iOS. Uniswap is a decentralized exchange app that is currently being used by most people. It is a decentralized exchange that enables peer-to-peer marketing. Additionally, Uniswap enables users to trade crypto without the need for intermediaries like banks. Besides, Uniswap is a decentralized ecosystem that eliminates centralized authority. The reports suggest that its users have been getting its trading services through web-based applications.
Uniswap managed to launch its wallet on IOS, and although Apple was still not cooperating with the launch of the wallet, Uniswap managed to do it. The Uniswap developers team was complaining that the Apple Store had them holding up the wallet, even though the green lights were visible to them. However, Uniswap was not yet satisfied with this move since they never had a dedicated application for Android users.
On the 12th of October, Uniswap launched an application on Android. According to their announcements, the decentralized exchanges managed to launch an application known as the Beta app. The application enables its users to select coins on different chains without switching to different networks. Basically, the application detects where the coin is and switches it up to another network automatically. Moreover, the users are not required to initiate the switching.
Moreover, transactions in the wallets are protected from various attacks, especially the front-running attack and the sandwich attack. This protection against the attack is managed through a private pool; besides, the feature can be turned off by the user’s preference.
The development of the application is not yet over; the developers are to release the app’s open-source code in the coming week to initiate security. Further, it announced that it will be signing up for an email waitlist; the email will be used to roll out copies to early adopters.
Conclusions
Last week was a crazy week in the financial sector, with announcements concerning new applications and how decentralized applications are posing risks to the European financial industry. Although the decentralized finance system has brought developments to the financial industry, it has also created volatility risks for the financial sector. Cryptocurrencies are volatile commodities, and traders should be careful before engaging in any crypto trading.
Moreover, with the invasion of Uniswap’s decentralized exchange application to Android users and Apple stores, users can comfortably conduct transactions from anywhere in the world. Moreover, this will increase the engagement of the decentralized exchange app.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
