Academy - Decentralized Finance (DeFi)
DeFi - Decentralized Finance
By Crypto Nation – 16 September 2020
The DeFi, decentralized finance, has become essential for several months in the world of cryptocurrencies. Considered a promising and revolutionary field, we must nevertheless remain vigilant. It should be noted that the total blocked value (TVL) is over $ 10 billion.
What is decentralized finance ?
The DeFi aims to create an ecosystem of financial services transparent, open-source and non-censurable. It is a sector that claims to be open to everyone, because it does not have a central operator. The users maintain full control over their assets and interact with the ecosystem in two ways:
- With peer-to-peer (P2P).
- By decentralized applications (dapps).
One finds in DeFi an unmistakable advantage: access to financial services. Even more so for those who are isolated from the current financial system.
In addition, the possible applications in the field of decentralized finance are very wide. Expect many new financial markets, products and services to emerge.
The program :
The main advantages of DeFi
In our current system, everything relies on institutions such as banks or courts.
In DeFi, there are no intermediaries, no arbitration.
Its operation on the blockchain allows DeFi to be almost incensurable, and without denial of service, because the data is present on thousands of network nodes around the world.
Access to financial services remains DeFi’s main strength. Costs are greatly reduced there, while being able to benefit from a wide range of services.
The characteristics of decentralized finance
DeFi uses decentralized applications (dApps), and works in the majority of cases, on the Ethereum protocol (ETH). This makes for an open-source network, so developers can add content more easily and quickly.
These applications then operate through their interactions with smart contracts. These contracts will define in a complex way, the terms of the agreement between different entities without even needing an intermediary. Accessible to anyone with an internet connection, this system is transparent and decentralized.
What are the potential use cases for DeFi?
We will take 3 examples of the use of decentralized finance:
- Banking and monetary services
DeFi applications are financial. They are therefore able to offer services such as mortgage or insurance.
- Borrowing and Lending
This is undoubtedly the most widespread use currently in DeFi, lending or decentralized borrowing, having many advantages over the current system: instant settlement, possibility of credit checks, possibility of collateralizing digital assets…
- Decentralized markets and exchanges
Make way for financial innovation with DeFi. Decentralized finance gave birth to DEX. Decentralized exchanges, allowing users to exchange cryptocurrencies without the need for trusted intermediaries, directly from one wallet to another, thanks to Smart Contracts.
Find our guides on DEX platforms :
Project examples
Chainlink (LINK) is currently the master of DeFi.
The Wrapped Bitcoin, is like a fork of the Bitcoin, which can run on Ethereum.
Dai is the biggest DeFi Stablecoin. It goes hand in hand with the Maker, which is its governance token.
Uniswap is the utility token of the giant decentralized platform of the same name.
Synthetix Network has been talked about a lot, offering annual interest of up to over 40%!
The full list is available by clicking here.
Invest in this ecosystem
If you want to easily invest in DeFi projects while receiving annual interest, check out our guide on Just Mining.
Just Mining offers five DeFi projects to be staked, for now.
Ranging from 5% to over 35% annual interest rates, they are as follows:
You can also take a look at Feel Mining which also offers several other DeFi projects in staking. Our guide by clicking here.
DeFi aims to provide us with a more open financial system, without censorship or discrimination, and this all over the world.
If the project of this ecosystem succeeds and grows, the power of large centralized organizations will be diminished and will be transferred to the hands of the community.
