Decentralized Finance- Defi (Part 1)

in Beauty of Creativity2 months ago

Hello all
How are you all?
I am fine.
Today i have come with an informative blog. I think this will help a lot cryto talkers. Because today,i am going to write about Defi.
So, let's start the blog.

When you plan to invest some money, your first investment option will be in
central banks, because you think they are the safest.
When you invest do you think your asset in your control? It’s not.
The banks and other intermediaries have control over your money. The
professional managers work efficiently with your money so that they can make
higher returns and benefit the account holders.
What if the bank is under emergency and leads to zero cash balances? Yes, it is
possible!
The risks of bank investments are high. So, cryptocurrencies like Bitcoin,
Ethereum, and various others came into existence a few years ago. These digital
currencies are decentralized in terms of issuance and storage.
Although they are decentralized, many exchanges are still centralized. Also, some
of the organizations that manage these currencies are centralized. Ultimately, the
solution to this problem is to build tools that allow us to control our own assets.
Technology has made it possible through the creation of Decentralized Finance
(DeFi). Now, let’s understand more about DeFi.
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What is DeFi?

Decentralized Finance (DeFi) is an ecosystem of applications built on blockchain
to facilitate permissionless financial services. The protocols, smart contracts,
DApps, and digital assets built on Blockchain are the components of decentralized
finance. Decentralized Finance (DeFi) offers a range of marketplaces to ensure that
an individual is the only owner of his assets.
The Decentralized Finance (DeFi) protocols are interoperable, programmable, and
composable. Interoperability means that the functionality of the system is isolated
and they work together in transparent nature. Programmable means that the smart
contracts control the transactions without the need of people. Composable means
that there are no limitations to what can be built within the system. The largest and
major application of DeFi is Maker DAO founded by Rune Christensen.
Let’s get deeper to understand more about DeFi.

What is unique about Decentralized Finance (DeFi)?

DeFi is unique because of its decentralization. The concept of Decentralized
Finance revolves around the concept of “money Legos”. The money Legos concept
is that anyone can create, modify, mix-and-match, link, or build on an existing
system without the need for anyone’s permission. The DeFi protocols are adaptable to pile up on each other to develop a condensed system of interoperating
parts.
The interdependence feature of Decentralized Finance may sometimes become a
risk because if the key component like DAI gets corrupted, there are chances that
the entire system may be crashed. According to the DeFi pulse, a total of $1.75
billion worth value is locked in various DeFi products.
Decentralized Finance products can open up financial access to millions of people
on earth. Anyone with an internet connection can access lending services, complex
financial products, stable stores of value, and investment and trading opportunities.
DeFi products are deployed using code that is distributed across a decentralized
network. So, whoever wants to use the product can use it without any
inconvenience.
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How to create & use Decentralized Finance products?

Those who can write smart contracts can create DeFi applications. InstaDApp
which is a DeFi asset management platform built a DeFi product by developing a
better UI on the existing DeFi products. InstaDApp was able to create a spike in
other Decentralized Finance products by making DeFi access more user-friendly
and simplified. Hence, they were successful in raising $2.4 million in funds
without the need for any permission.
Any individual can use the Decentralized Finance products by visiting the
application’s website and connecting a MetaMask wallet or some similar wallet.
The users need not provide any personal information or register in most of the
DeFi DApps. But they should provide their ETH address to process transactions
through the Ethereum network.
Maker Dao’s Oasis app and compound allow the users to take a loan or earn
interest on the stable coins invested. Users can exchange tokens and crypto assets
without the need for registration or any sign-ups on Uniswap and Kyber which are
DeFi products. The Set protocol allows users to buy tokens to initiate automated
trading.