Defi understanding: complete description of cryptocurrencies and decentralized financial industry
The world of cryptocurrencies has exploded in recent years, while bitcoins and other digital currencies have gained recognition of the main current. However, in addition to traditional financial institutions and investors, a new threshold – Decentralized financing (DEFI) appears. In this article, we immerse ourselves in the basic concepts of Defi, its applications, the benefits and the key actors to help you understand this fast -growing industry.
What is defi?
Decentralized financing refers to the practice of creating financial services without the need for traditional intermediaries or financial institutions. Unlike traditional banking systems that depend on centralized authority, platforms define in a decentralized network, allowing users to control their money and make transactions directly to each other.
Defi platforms are designed with blockchain technology that provides a safe, transparent and unauthorized book for all transactions. This allows loans, loans, trade and investment opportunities without the need for intermediaries or banks.
Defi
Key Components
- These contracts automate many financial processes, such as interest payments and loans.
- Tokenization : The process of creating digital tokens that represent the property in assets or projects. Tokens can be used to increase capital, loan management or guarantee the guarantee of loans.
- Decentralized exchanges (DEXS) : Online markets where users can buy, sell and exchange cryptocurrencies without the need for intermediaries.
- Liquidity suppliers : Individuals or organizations that facilitate transactions on the defi platforms when providing liquidity to other users.
ADVANTAGES OF DEFI
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- Lower rates : Transaction rates are often lower in defi compared to traditional banking systems.
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- Greater access to finance : DEFI platforms provide access to financial services for populations and individuals who do not have to participate in traditional financing.
Defi applications
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- Insertion : Users can ensure their tokens to participate in management decisions, receive remuneration and use network security.
- Commerce
: Users can buy, sell and exchange cryptocurrencies in decentralized exchanges without the need for intermediaries.
- Investments : Defi platforms provide investors opportunities to associate funds and invest in several assets or projects.
Key Defi Industry **
- Radn.finance : Credit protocol that allows users to provide tokens and increase interest.
- AAVE : Decentralized credit platform offered by high interest and liquidity.
- UNISWAP : Decentralized Stock Exchange (DEX), which allows trade with several cryptocurrencies.
- Curve : Decentralized stable platform, which provides a united cryptocurrency to maintain prices stability.
calls and concerns
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- Scalability problems : Some protocols defi fight with scalability, which makes it difficult to process large volumes of transactions.
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