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    The Unbelievable Behind DeFi You Never Imagined Existed

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    THE UNBELIEVABLE BEHIND DEFI YOU NEVER IMAGINED EXISTED
    DEFI

    THE UNBELIEVABLE BEHIND DEFI YOU NEVER IMAGINED EXISTED

    Since 2019/2020, the term Defi has crept into the Cryptocurrency space with many questioning what it is even till now. Just like many other trends in cryptocurrency, Defi came with lots of enthusiasm for how decentralized finance will change traditional finance institutions.

    Defi is short for Decentralized Finance which is a general term for several finance applications in the Cryptocurrency and Blockchain space with the sole aim of disrupting finance intermediaries. Defi isn’t controlled by anyone thus allowing users full control of their assets.

    The key advantage of Defi is eliminating the presence of middlemen or financial intermediaries in the course of conducting a transaction and this makes for cheaper and seamless transfer of digital assets among users.

    Several Defi applications are built on the Ethereum blockchain Ethereum blockchain as it’s easier to build different types of decentralized applications there. One may begin to wonder why build on Ethereum? What about other Digital assets?… Well, the answer is not far-fetched because Ethereum uses smart contracts which enables it to automatically execute transactions without the need for an intermediary. It’s important to note that smart contracts are made possible by blockchain which is a network of interconnected computers working together to enforce rules without the help of any intermediary.

    Furthermore, some analysts have expressed concerns regarding the scalability issues of Ethereum but we firmly believe Ethereum 2.0 will take care of these concerns and give the app built on Ethereum blockchain the much-needed boost to function properly.

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    THE UNBELIEVABLE BEHIND DEFI YOU NEVER IMAGINED EXISTED: TYPES OF DEFI

    There are several available types of Defi in the Cryptocurrency space.

    1. Decentralized Exchanges: it’s safe to say this is the hottest among them all as it allows its user’s easy access to exchange one digital asset to another without registration, KYC, or any other bottleneck associated with centralized exchanges. There is no intermediary here.

    2.Lending Platforms: This sort of app aims to replace the traditional banking we know, it uses smart contracts to replace intermediaries like banks when it comes to lending digital assets.

    3.Wrapped Bitcoin: This is simply sending Bitcoin to the Ethereum network such that the Bitcoin can be used on Ethereum’s Defi ecosystem. It allows users to earn interest on the Bitcoin they lend out via the decentralized lending platforms described above.

    4. Yield Farming: This involves having your tokens of choice locked for yield benefits in the form of the same assets or a different token, This is a huge way to improve the liquidity of any given token as well as reduce available supply thus pushing prices up.

    5. Stable coins: These are digital assets tied to conventional monies we know about in order to stabilize the price. Examples, TUSD, BUSD, HUSD, etc.

    Notably, several Defi projects entice users to join their platform by offering them free tokens when they provide liquidity to their platform. The Defi craze is still very much around and will obviously stand the test of time as the technology continues to evolve even with its present challenges of getting attacked from time to time. Let’s remember we all have a duty to stay safe while using any Defi protocol.

    One of the most pertinent questions from traders and participants in this space is usually, how do I make money from Defi? If this question has ever crossed your mind then keep reading while we dissect the benefits of Defi for you.

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    THE UNBELIEVABLE BEHIND DEFI YOU NEVER IMAGINED EXISTED: ADVANTAGES OF DEFI

    -Using Ethereum-based lending apps, as specified above, users can generate “passive income” by loaning out their digital assets and generating interest from the loans.

    – Yield Farming described above, has the potential for even larger returns, but with larger risk. It allows for users to leverage the lending aspect of Defi to put their crypto assets to work generating the best possible returns.

    While it can be very rewarding investing in Defi, it’s pertinent not to get carried away with just the gains from this asset class as there are several risks involved when dealing with any Defi protocol. Protecting your capital while trading on any assets is of utmost importance. Many believe Defi is the future of finance and as with any new technology, this financial technology is still new and experimental and sadly Defi bugs still exist and there remain concerns for security and scalability.

    Conclusion:

    Defi obviously has come to stay as developers will continue to find ways to make it even better especially with security and scalability.

    Many believe Ethereum 2.0 will no doubt fix scalability worries and make Defi more attractive.

    Get more on Top Defi Tokens

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