When people first enter the cryptocurrency space their initial understanding generally comes from YouTube influencers talking about how everyone will make massive gains. WAGMI — ‘We’re All Going To Make It’ is a very popular refrain and the effect of this expectation for constantly high yields with little to no risk is as damaging as it is misinformed.
Since our launch we’ve strived to communicate our main vision for Paribus, to bring financial tools to people and areas of the crypto market that lack them. We’re not a meme coin looking to ‘moon’, we’re a serious decentralized finance project that aims to help people throughout the world. It’s easy to get swept along in the current of metaverses and NFT launches and forget the more fundamental problems decentralized finance is here to solve — barriers to access for financial tools and individual financial sovereignty.
In a society where there are significant numbers of people unbanked or underbanked, the idea of accessing fair and equitable financial tools seemed impossible before the advent of DeFi. Many people in these situations are subject to predatory lending practices which keep them in a low income, low financial freedom rut. Many, if not all DeFi projects are aiming to reverse this and give people methods to help lift them out of poverty rather than keeping them subjugated.
One simple principle for financial growth is to always buy appreciating assets and never to sell them. But how do you do that when your income is restricted and you have no means to get a loan on a house or apartment? Instead, you can only find people willing to lend you money to buy depreciating assets such as household goods, vehicles, and the like. This is exactly where cryptocurrency and DeFi in particular are stepping in to change the world and bring financial freedom and opportunity to everyone, not just a select few.
Wilson, COO of Paribus explains, “Borrowing and lending systems can be thought of as simply another tool to help utilize current crypto assets to their fullest potential. Many investors’ trading strategies involve continually accumulating cryptocurrency. Acquiring a loan can give a trader additional capital for further investment while keeping current funds untouched. Also, lending funds to a protocol can earn interest that allows your assets to work for you.”
Most cryptocurrencies are by nature deflationary, unlike fiat currencies such as the US dollar. Added to their deflationary nature they are also generally appreciative assets rather than depreciative and the entry point can be as little as a few dollars. Many people are now becoming familiar with the concept of investing using a Dollar Cost Average model, buying small amounts regularly. Added to that they’re also learning to hold onto their tokens and watch them steadily increase in value. The increased number of people using DCA and HODLing is a direct result of the cryptocurrency movement.
“We all know how volatile the crypto market can be, this is why we believe that HODLing is so important.”, Wilson points out, “HODLing can benefit the investor in many ways, first by changing the mindset of always being concerned with the ups and downs of the market and focusing on the long term success of the project itself. This in turn can help investors avoid realizing losses and waiting for the correct opportunity to take gains. Second, a reduction in swing trading can help to stabilize the market which allows it, in general, to become less volatile.”
Follow the Whales
Every large-scale investor in the market from Michael Saylor of MicroStrategy to Raoul Pal of Real Vision says the same thing about cryptocurrency — don’t try to time the market. Yet on YouTube there are endless videos claiming to prophesied the next 100x gem or how to make millions from a handful of dollars. These unrealistic expectations often lead people into high-risk, volatile trading strategies that make them get rekt rather than netting them a fortune.
In this situation it’s easy for the atmosphere to become febrile, filled with fear and greed rather than noble sentiments of the rising tide lifting all boats. That’s why we never make price predictions for Paribus, instead, we focus our community engagement on education, development fundamentals, and sharing our vision and journey with people. This is more than just sentiment though, it goes to the roots of why we’re here and what we hope to achieve.
Just recently we’ve seen the benefits of this kind of engagement and support from the community as Bitcoin volatility has greatly affected the wider crypto market. As Wilson explains, “I believe that we have seen the benefits of staking and HODLing with PBX. Although we have also witnessed a market downturn, PBX is doing relatively well in comparison to other altcoins. We appreciate the continued support from our community even during these types of market conditions.”
We know that if you’ve invested in an illiquid asset you’re at high risk of having to sell it at the worst time rather than the best time. This is what the crypto market is renowned for, people buying when the price is going up, due to fear of missing out and selling when the price is falling. It’s taking money from weak hands and moving it to strong hands which invariably benefits those with the most resources, making the rich richer and the poor poorer.
Instead, being able to leverage your assets rather than having to sell them gives people the opportunity to access liquidity when they need it without losing their holdings. This is precisely the way wealthy investors are able to grow their holdings, but prior to DeFi it was far beyond the reach of many people. Rather than using payday lenders with exorbitant interest rates, Paribus users will be able to leverage their digital assets to borrow at far lower interest rates. Meaning they will be able to hold onto their underlying assets, be able to afford the interest, and over time, grow their holdings.
Wilson adds, “Participating in borrowing and lending systems essentially creates an additional layer of abstraction that can allow already owned funds to create more funds which work for you by generating passive income. Passive income is the key to rapidly growing net worth over time.”
Our dream is to be able to bring financial services that were previously hard to access to everyone, irrespective of their income or location. We hope to de-risk to a greater degree the NFT and wider digital asset market so that people can afford to hold onto and grow their investments, helping lead to greater financial freedom and generational wealth throughout the whole world. To help people in hyper-inflation economies to transfer their fiat to crypto and generate a yield from it rather than losing its value in the space of a few days or weeks.
Ours is a bold vision, but it's one that's shared by many people in the DeFi and cryptocurrency space. So many in fact that we truly believe we can change the world together and bring financial freedom to countless people. That's why we're honored to be here and to have you join us on this once-in-a-lifetime journey.