DeFi crypto or Decentralized Finance, is a fairly young concept in the world of cryptocurrencies. Its objective is to revolutionize the traditional finance sector by eliminating financial intermediaries. Discover how DeFi works, its fields of application and especially the DeFi crypto-currencies in which to invest!
What is DeFi crypto?
DeFi is short for Decentralized Finance or decentralized finance in French. But what is it really about?
Definition of DeFi
DeFiDeFi can be defined as a set of applications of cryptocurrencies and blockchain technologies. It brings together decentralized applications or DApps and its main objective is to reform access to traditional financial services.
Thanks to DeFi, a new decentralized financial and monetary system will be set up. The latter will be transparent and will aim to overcome the limits of the current system, in particular by eliminating intermediaries and their costs.
Revolutionary Banking and Financial Services
DeFi is blockchain-based and offers banking and financial services with the following features:
Absence of intermediary: it is no longer necessary to go through a bank to make your transactions
Instant services: you do not have to wait days, up to a week for your transaction to be validated
Transparent transactions: Using blockchain makes your transactions safe and transparent
Much cheaper fees: the absence of intermediaries makes transaction fees low or even free
DeFi Crypto: Advantages and Disadvantages
Advantages
Ease of account opening procedures
Total respect for your anonymity
Flexible services
Full transparency
Speed of transactions
Disadvantages
Regulations may vary from one geographical area to another
Fairly new technology, so still unclear
3 Major DeFi Players
Decentralized Exchanges (DEX)
Crypto Wallets
Blockchain and Smart Contracts!
Decentralized Exchanges
A decentralized exchange or DEX is a crypto exchange platform based on blockchain technology. Thanks to this kind of platform, users can exchange and trade digital assets without a centralized entity governing the transactions. DEXs have the advantage of offering very low fees and transactions are very secure compared to traditional financial systems.
Here is a list of some decentralized exchanges:
Uniswap
Pancake Swap
Poocoin
curve
Swing
loop ring
Crypto Wallets
Crypto wallets are digital wallets in which purchased virtual currencies will be stored. Software wallets are dApps that can be associated with other applications to make transactions more convenient and easier while expanding their field of use.
The main wallets used by traders are:
Metamask
Trust Wallet
Exodus
Good to know: there are 2 types of crypto wallets: software wallets which are software wallets and hardware wallets, hardware wallets. The first type is best associated with dApps and DeFi.
Blockchain and Smart Contracts
Smart contracts are so-called "intelligent" contracts that automatically execute when specific conditions are met. They are registered on the blockchain and are widely used in DeFi for their security aspect.
As we mentioned above, DeFi is based on blockchain technology. The 2 most used blockchains are:
Ethereum
Binance Smart Chain or BSC
Good to know: Many other blockchains are increasingly used, including those of EOS, NEO or Tron. However, Ethereum and BSC remain the networks acclaimed by the community.
Conclusion
DeFi is a vast ecosystem that could completely revolutionize the financial world and the traditional banking system on a global level. Exit intermediary entities to manage loans, insurance and payments. The association of DeFi applications with blockchain technology makes their use safe and transparent. Regarding investors, there are many opportunities to make money through DeFi. Everything suggests that DeFi will push the limits of traditional finance.
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