The DeFi sector has been around for years now, offering users the ability to earn passive profits simply by engaging in staking, lending money to lending pools, and through other methods. However, for a long time, the cryptocurrency industry was blinded by the promise of higher profits achievable through trading and investing to pay attention to decentralized finance and its offers.
This finally changed in 2020, likely due to the COVID-19 pandemic. After the pandemic emerged, traditional markets crashed. Stocks went down overnight, major currencies saw their prices drop quite a bit, and people started looking into ways to earn from the crypto industry, for the first time being open to any option that is safer than trading and that can help them earn faster than investing and then waiting for years.
And so, in mid-2020, the crypto industry re-discovered DeFi, which resulted in the sector blowing up and becoming extremely popular and profitable. Over the last two years, however, it got so much attention that it started developing and becoming more complex, with projects such as Rari Capital emerging and launching multi-purpose tokens like its Rari Governance Token (RGT).
How Does Rari Governance Token (RGT) Work?
Rari Governance Token is the native token of Rari Capital — a platform that aims to empower individuals to break free from the current, inefficient banking and traditional finance by creating new opportunities, communities, and financial products. Its goal is to empower the users and developers and make it rewarding for everyone to access the protocol and switch to decentralized finance.
It offers an interface to access two projects on two blockchains – Rari Capital on Ethereum, and Market on Polygon. In terms of services, it offers lending/borrowing, yield farming, as well as more regular things such as trading and investing. However, Polygon’s Fuse also acts as an open interest rate protocol that works on pretty much any asset.
What Problems Does Rari Governance (RGT) Solve?
Rari emerged in the early days of DeFi, in early June, and ever since then, it has been working hard on making DeFi accessible and available to developers and users alike.
Easy access
Rari’s aim is to make DeFi activities easy to access, so that everyone can do it. It is well aware that there are many people around the world who do not have a tech background, and they struggle to adopt emerging technologies such as crypto and blockchain. However, these technologies offer opportunities that are now readily available at all times, but the complexity of blockchain usage discourages people from doing it, even though it can lead to a massive change of their life.
Rari aims to simplify things and make activities such as lending, borrowing, and yield available, accessible, and as simple as it can make it.
Enabling developers around the world
Rari also aims to enable developers from all parts of the world and allow them to focus on their product offerings. After analyzing the situation, it concluded that developers spend too much attention on trivial matters, such as lending and borrowing. We say trivial, because for developers, using these features is rather simple. So simple, in fact, that the protocol can do it on its own, allowing the devs extra time to improve their product, double-check the code, add new features, and overall, make it better than ever.
Rari Capital and Market
In order to allow users to access the protocol, Rari has come up with two versions of the interface — Rari Capital and Market. The project describes Rari Capital as its primary interface, a default mode for interacting with the Rari Protocol within Ethereum’s network, where it operates. As for the Market interface, this is its flagship product for interacting with Fuse on the Polygon Network. Users can, of course, choose which chain they prefer the most, and use the corresponding interface to start interacting with one of the two from anywhere around the world.
Benefits of Rari Governance Token (RGT)
Rari Governance Token brings several benefits to the users, which were mentioned already before, but let’s quickly run through them and explain what they include.
Lending/borrowing
Lending is the biggest and most popular activity in the DeFi sector, with some of the highest-ranking projects by total value locked (TVL) being lending protocols. Rari started as a lending platform as well, as most do, but moving forward, the project decided to spice things up in its own way — by adding some extra creativity. It decided that re-balancing between the protocols is not enough, and so it introduced rebalancing between stablecoins, as well.
Yield farming
Rebalancing allowed Rari to bring increased yields, which is quite noticeable on an annual level. Following that, the project started pushing towards democratizing access to tools that were previously only available to market makers and sophisticated traders, all for the purpose of pushing yields upwards. In the early days, it noted that it can offer 1.3x Compound’s yearly DAI return, with the goal of achieving a maximum of 2x over time.
Governance
Finally, RGT owners also get to participate in the project’s governance, as well. Being a decentralized project that it is, Rari doesn’t make decisions regarding its project on its own, but rather, it leaves it up to its community to come up with new improvements to its network and protocol, and decisions on which ones should and shouldn’t be implemented.
Bottom Line
Rari is a great example of a DeFi protocol that aims to empower users and developers and encourage them to take steps towards their own financial freedom. It believes that traditional financial institutions have been taking advantage of the people for far too long, and now that there is an opportunity to take the power away from them and take off on their own — users should definitely do it.
