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What is DeFi Marketplace?
DeFi Marketplace uses a blockchain network to provide a global, permission-less, and self-executing marketplace. The fundamental concept of a DeFi Marketplace is to provide a marketplace or space that matches buyers and sellers to sell goods and services without needing an intermediary. Unlike any traditional E-commerce platform and online marketplaces such as Craigslist or eBay, the core of DeFi Marketplace is that all trade and funds transactions are controlled by a smart contract or program instead of a person.
That said, some of the advantages of DeFi Marketplaces includes:
- Permission-less and resistant to censorship as the program automatically executes all transactions once the seller and buyer agree to the buying/ selling term.
- 24/7 payment system without geographical limitation since most DeFi Marketplace uses cryptocurrency as the payment methods.
- Service fees are less expensive or might not be required due to the absence of middlemen and intermediaries.
What are the Fundamental Features of a DeFi Marketplace?
A single entity does not control the network.
The laws that govern the market are open to all members of the network. Features like feedback and ratings on the marketplace, for example, are fully accurate and uncontested.
The immutability feature of the blockchain is implemented using cryptographic hash functions. Plainly stated, once data is entered into the blockchain, it cannot be deleted.
DeFi Marketplace Applications?
OpenBazaar is an example of a DeFi Marketplace where it acts as an application that is peer-to-peer or directly connects buyers and sellers. OpenBazaar does not own its blockchain. However, it is built on a Ricardian smart contract, although most DeFi marketplaces have been created using Ethereum technology.
OpenBaazar allows users to choose from three different payment methods: direct payments, moderated payments, and offline payments. Using a direct payment method, buyers can send coins to the seller after agreeing with the buying/ selling term. Through moderate payments, a buyer will choose a third party as a moderator. The payment will be sent to the escrow and will only go through if two out of three parties give their approval. Offline payment is when the buyer decided to make a direct payment to an offline seller. The payment will be made into a temporary escrow account that both the buyer and seller could interact with any time they want.
While the core nature of a DeFi marketplace is still similar to the traditional centralized marketplace (selling and buying products online), traditional marketplaces only function through having a company-owned platform to connect different users to potential sellers, which resulted in expensive transaction fees, regulated and product censorship, and personal data collection. Decentralized marketplaces are an excellent use case of blockchain and smart contract technology in our everyday life. We hope to see more of DeFi technology applications in our daily life.
Stay tuned and see you again next time!
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