Challenge #2 : Diving into DeFi
This post is a response to Steem Crypto Challenge Month #2 : Diving into DeFi organize by @steemitblog which you can find the details here Steem Crypto Challenge Month #2 : Diving into DeFi
Steem joining Tron ecosystem via @projectw protocol swapping Steem to WST token
What is DeFi for me?
There are a lot of definitions out there that you can get by google-ing it, but in this post, I will explain what defi is in my own understanding.
Decentralized finance(DeFi) is a process on the blockchain that usually happens in the traditional banking system, done through a Smart Contract, an agreement that already put in place on the protocol and fully automated, meaning we don’t need a middleman like banking system to get into any of the things that the banking system out there usually does.
You don’t need to go to the bank, going through a middleman in the bank preparing all the paperwork, and provide all other proof that you could to make the bank convinced that you are eligible for any product that they're are offering.
Graphic by finematics
Have you ever bought any DeFi tokens?
I have tried using the Just lending and borrowing protocols USDJ, SUN mining yield farming and other yield farming protocols built on Tron networks such as token(Blocks/Nodes) Blocknodes.io maintain by @steemingcurators Yield Farming team.
What makes you excited about DeFi?
Defi excites me as I can finally do something that I can’t at a traditional bank, for example, to get a loan and save my money with a better interest rate(staking/yield farming).
With Defi, you can save your money in the form of cryptocurrency and get much better(APY) interest for that. Compared to when you save your money in the traditional bank, usually, we only get like 0.1% APY or sometimes they even deduct your money for administration fees or other miscellaneous fees.
Also, money in the bank will decrease in value in time as the bank of any country in the world keeps printing(unlimited supply) the money for example the World Reserve Currency(USD) by the Federal Reserve. On the other hand, the value of cryptocurrency for example Bitcoin will keep going up in time because the amount of bitcoin that will ever be produced is limited, there will be no more bitcoin after 21 million bitcoins being produced.
Bitcoin also has a stipulation—set forth in its source code—that it must have a limited and finite supply. For this reason, there will only ever be 21 million bitcoins ever produced. On average, these bitcoins are introduced to the bitcoin supply at a fixed rate of one block every ten minutes. In addition, the amount of bitcoin released in each of these aforementioned blocks is reduced by 50% every four years.
Which project do you think is the best DeFi application？Why?
JUST DeFi lending and borrowing
Personally, I like JUST Defi on the Tron Blockchain. JUST DeFi(lending and borrowing) is an alternative to Makerdao on Ethereum Blockchain but with much cheaper transaction fees and faster than any similar products on Ethereum protocol.
One of the reasons we move into cryptocurrency is:
- to get rid of high fees on moving our money and also
- to eliminate the long process of preparing contract/agreement on the products in the traditional bank which is solved by a Smart Contract on the protocol.
JUST DeFi ecosystem providing this to its users. It's just like another bank with blockchain technology with faster and cheaper transactions.
JustSwap Liquidity Pool based Decentralized Exchange
Another thing that I like on Tron Blockchain is their liquidity pool based decentralized exchange Justswap. I can easily exchange my crypto from another blockchain that is in form of TRC20 into any other token on Tron without going into any centralized exchange. If I become the liquidity provider(provide the liquidity pool with my own token), I can get reward through the trading fees that happening on the liquidity pool.
photo by sun.io
SUN Mining Yield Farming
I also like their recently launched SUN token that will be limited in supply like bitcoin. Why? Because I can sow this limited coin without an expensive mining machine as the bitcoin token required. I like all the Defi products that being introduced on Tron blockchain so far. They have added bitcoin into the Sun Mining Pool too. That is exciting because you can now hold your bitcoin and also get an interest in the form of SUN token which is also limited in supply.. How cool is that?!
Photo by @projectw team
What’s the mechanism of DeFi or any DeFi project?
I like the mechanism of most of DeFi project that they are permissionless and trustless/trutless tokenized as all the transaction done through a Smart Contract that has been prepared all the agreement in advance and fully automates.
I like that it also now we can do an Interblockchain transaction, for example now we can swap our STEEM token into a WST token that can be swapped on JustSwap into any other Tron based token to join the funland of Dapps on Tron network, thanks to the @projectw team for this.
Another exciting feature on Tron Blockchain is that they now have a TRC20 version of Bitcoin. Meaning we can now use bitcoin on the Tron blockchain ecosystem.
DeFi ecosystem has lot more to offer Graphic by finematics
Are you feeling positive or negative about the future of DeFi?
I have super positive bullish feelings about the future of Defi. Defi is the future of banking. I can see that in the future people will be using blockchain to do anything that traditional banking is doing right now. My favorite DeFi protocols/ bank of blockchain currently is on Tron blockchain because their product is affordable for an average investor like me. They allow me to test the water of DeFi without using much capital upfront to try everything that interest me. The Tron ecosystem is so exciting with all the fun Dapps and soon they would be more as more developers developing their apps on Tron ecosystem, and I can't wait to try all of those cool and rewarding Dapps!
Photo by @steemingcurators