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Beginner's Guide to DeFi

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?

Beginner's guide to DeFi
  • 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.

Beginner's guide to DeFi


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