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FaaS / DeFi 3.0
Farming as a Service
TL;DR
Pay someone to manage your DeFi investments for you.

Intro

In the summer of 2020, there was DeFi 1.0. Bringing us Decentralized Exchanges and introducing us to Yield Farming. Then, 2021 ushered in DeFi 2.0, which sought to resolve the unstable liquidity. This was done by implementing a new structure for exchanges, one in which protocols owned their own liquidity. Finally, we reach the current day and the dawning of DeFi 3.0. The advent of Farming as a Service.
With ancient history and marketing terms out of the way, let's look at what FaaS actually is and why it matters.

What is it?

FaaS or DeFi 3.0 is a new type of service that operates much like a mutual fund in traditional finance. DeFi is a complicated space with a whole lot going on. It is very difficult for an individual to stay on top of what and where the best yields are across all these different chains. Its a full time job! FaaS allows you to make it someone else's job.
For those unfamiliar with a how a mutual fund works, it's like this:
You and a bunch of pals throw money into a big pot then give that pot to a professional investor for him to manage. That's basically it. Fusing funds together to create a kind of franken-whale.
Users participate by purchasing the protocol's token. Their funds are then sent to the protocol's treasury which is then used as capital for the head farmer of the protocol. The head farmer will create a few investment strategies, diversify investments and generally chase the best returns across chains like a professional. The gains from these investments are then used for buy backs of the protocol's token to increase its value. Often protocols distribute rewards to token holders as well.

Why does it matter?

Pooling funds like this is extremely powerful. In 2020, mutual funds controlled $23.9 trillion in assets worldwide while total market capitalization of global markets was only $93.686 trillion. That means mutual funds control about a quarter of the global market.
The Big Three: Vanguard, BlackRock and State Street control most of those mutual funds. In TradFi, mutual funds are a HUGE deal. They can easily make or break markets or even nations.
The concentration of small time investors into these big FaaS protocols will mean more whale-like activity cross chain. Worst case scenario we see a plague of pump and dumps across all the networks.
That's not to say that concentration of wealth is necessarily going to happen in DeFi. I would just like to point out that they have a tendency to grow very very large. This is in part due to their largest advantage: they are easy to use! You don't need to know anything about finance to turn over your cash and start earning yield.
This ease of access is a large part of the draw of DeFi and Crypto in general. FaaS makes it easy for small pockets to profit. And that is ... kind of beautiful.
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If you'd like to check out some FaaS Protocols for yourself, here are a few:

  • ​ReFi - ReFi
  • ​FFF - Food Farmer Finance
  • ​MCC - Multi-Chain Capital
As always, you can find more content like this at learn.bytemasons.com
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