With the recent news of major US bank failures circulating in the media, many investors are turning their attention to decentralized finance, Web3 payments and related investment opportunities.
A major player emerging in the Web3 payments space is in the sea – a newly launched fully decentralized crypto payments platform that uses a unique liquidity pool system to support transactions.
This system and other distinctive features make Pelago DeFi its strongest response yet to centralized platforms in traditional finance, crypto and, as we will discuss below, the problems associated with it.
Four key features set Pelago apart from traditional financial services and crypto payment competitors:
- No custodian risk
- A liquidity pool system that reduces costs while creating a unique investment opportunity
- Simplified payment and integration processes for centralized experiences
- Advanced and comprehensive data protection measures with zero-knowledge proofs, decentralized identities and verifiable credentials
No custodian risk
With many depositors now facing losses in both traditional finance and crypto, the risks associated with mismanagement and fraud by centralized entities have become more apparent. Since a fund aggregation process is essential for payments, this custodian risk is highlighted by merchants who accept crypto payments through centralized processors.
To eliminate such risks, Pelago eliminates the need for the payment gateway to store the merchant’s private key in order to perform the aggregation of funds. Instead, it carries out the crypto payment process by executing transactions entirely via smart contracts in the format of liquidity pools.
Liquidity Pool Architecture
Pelago facilitates Web3 transactions using liquidity pools that aggregate payments, allowing merchants to settle many in a single transaction and at a lower cost than other payment aggregators. With Pelago, when a customer pays with crypto, their funds go into an open liquidity pool of the token they paid with.
The liquidity pools are also formed from the contributions of various liquidity providers. If the trader decides to complete the bulk transfer of all pending payments, the system will find a liquidity pool with enough assets to complete the transaction.
Simplified user experiences
Suitable for both Web2 and Web3 users, Pelago offers merchants and consumers simplified payment and integration experiences. Consumers don’t scan their wallet to pay with Pelago, which only requires scanning a single QR code, significantly reducing checkout time. This unique one-step payment process also saves customers transaction costs by reducing the gas fee. There is also no time-consuming onboarding or KYC process required for merchants, allowing for easy and barrier-free setup.
data protection
Pelago is the first to implement full on-chain privacy with zero-knowledge proofs, decentralized identities, and verifiable credentials in a crypto payment protocol.
These measures ensure that merchants using Pelago do not expose their wallet addresses or other sensitive information on the blockchain when recording payment transactions.
Thanks to the unique technology underlying the platform, crypto holders who contribute liquidity to Pelago enjoy various advantages compared to investing in traditional assets and other types of DeFi liquidity pools.
DeFi’s latest alternative to traditional investing
By allowing retail investors to facilitate transactions, DeFi liquidity pools provide an investment opportunity that avoids the volatility and illiquidity risks associated with investing in commodities and securities under centralized funding.
Pelago liquidity providers receive Liquidity Provider Tokens (LPTs) when they contribute assets to a liquidity pool while earning interest on those contributions in the form of the same type of assets that are provided. And as an additional reward, LPTs can be farmed for Pelago tokens.
The best investment opportunity for liquidity
Pelago is the first DeFi platform to use liquidity pools to support crypto payments. This type of liquidity investment brings some advantages over investing in DEX liquidity pools:
- Since only one asset type is provided by Pelago contributors, they’ll learn no temporary loss caused by a change in the exchange rate of the provided assets
- Interest income depends on the more stable payment demand compared to conversions
Pelago ensures a payment process that aligns with crypto’s decentralized vision and achieves a trusted, consensus-based payment solution. At the same time, decentralized payments will help make participation in the crypto economy more worry-free for the general public, many of whom have been reeling from disasters in centralized finance caused by mismanagement. Ultimately, these events highlighted the need for decentralization which, as mentioned, solves the risks associated with centralized crypto players.
For these reasons, Pelago will reinvigorate the crypto industry. For more information, visit the Pelago website or join the Discord.
Disclaimer
This article is sponsored content and does not represent the views or opinions of BeInCrypto. While we adhere to the Trust Project’s guidelines for impartial and transparent reporting, this content is created by a third party and is intended for promotional purposes. Readers are encouraged to independently verify information and consult a professional before making any decisions based on this sponsored content.
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