Beginner's Guide to DeFi

DeFi: What is it?

• Decentralized finance, or DeFi, provides financial services without relying on brokerage firms or banks.

Which are the largest DeFi projects?

• DeFi projects like Aave, Maker, and Compound have been around for a long time and become the most adopted by institutions over the past few years.

How do these DeFi projects function?

• You can borrow and lend cryptocurrencies using the aforementioned protocols

• You can borrow immediately if you can provide a certain amount of collateral

• You can also lend out cryptocurrencies and earn interest.

Other DeFi initiatives:

• Uniswap, a decentralized exchange on the Ethereum platform, lets you trade any cryptocurrency for another.

  • As a result, you won't need a middleman to exchange one cryptocurrency for another.

• Synthetix—synthetic assets—allows you to purchase tokenized stocks, giving you access to the stock market without having to use a stockbroker or traditional exchange.

How will the DeFi industry develop in the future?

• According to estimates from the World Bank, providing financial services to the world's 1.7 billion unbanked individuals is DeFi's most significant opportunity.

• DeFi can compete with traditional financial systems in addition to providing unbanked individuals with access to financial services.

  • A single transaction between two parties can take days to complete, and banks and intermediaries often charge the user a significant portion of the cost.

  • On the other hand, DeFi transactions can be significantly cheaper and take only a few seconds on most blockchains.