Hello Steemians, this week have been an awesome one for me in the crypto academy. I was able to engage in all the lesson and completed all the task. Today's lesson is delivered by professor @yohan2on on Decentralised Finance (DeFi).

Decentralised Finance (DeFi)

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The traditional method of the financial system involves a central body to control and verify transactions before they are processed. Decentralised Finance (DeFi) aims at eliminating this central body by creating an open-source, permissionless and transparent financial ecosystem that utilizes smart contracts on blockchains 1 DeFi allows users to lend, borrow and stake funds while having full control of their assets. DeFi eliminates the risk and corruption involves in traditional financial systems by providing financial services (loans, lending and staking) built on blockchain technology.

Maker

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Maker is a decentralized financial system built on the Ethereum blockchain. Maker aim at creating a decentralized financial system that enables users to lend out funds without losing control of their assets. Users are allowed to generate when they deposit a collateral asset. Dai is a decentralised stable coin that protects them against the volatility and fluctuations of the cryptocurrency in case their deposited supported currency losses value. Similarly, Maker is run by a decentralised autonomous community (DAO) that holds the MKR token, these holders have the voting power to make changes to the Maker Protocol. The MakerDAO community also plays a key role on the parameters of the Maker protocol such as the stability fees, interest rates, collateral types through the voting power of MKR token holders (Governance token) 2.

Compound

Compound is a DeFi lending platform built on Ethereum blockchain that enables its users to lend out their asset with annual interest. Just like the Maker Protocol, Compound is also a community-driven decentralised autonomous organization with its governance token known as COMP, This COMP token allows users to have voting power in the future of Compound protocol. Compound also rewards its users using the COMP token for lending and borrowing cryptocurrency.

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Compound allow users to deposit cryptocurrency as lenders or withdraw as borrowers. The deposited cryptocurrencies are deposited into an asset pool where users can borrow assets. Users are rewarded with ERC-20 token (cToken) as interest which can be traded at a higher value than the deposited asset. 3

Synthetix

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Synthetix is a DeFi distributed asset issuance protocol built on the Ethereum network. Synthetix aims at creating synthetic asset for tracking the real price of other assets such as stocks, commodities, metal and cryptocurrencies. Users are allowed to purchase and lock SNX token. The SNX token is used to create Synths which is used to track other real assets. Synths can be traded in the Synthetix exchange for other real assets like gold, commodities, metals and other cryptocurrencies. This will help to create the flexibility of financial assets.

BZX

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BZX is a DeFi protocol built on an Ethereum network that provides peer to peer lending, borrowing and margin trading services. BZX makes use of the token system which is managed by smart contracts. This simply means that the system is not controlled by any third party. This project has enabled traders to access margin trading in a decentralised platform, similarly, it also eliminates the threats and vulnerability of hackers in centralized exchanges when lending and borrowing funds.

Uniswap

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Uniswap is a decentralised exchange that allows you to trade ERC-20 tokens directly without any link with the centralized exchange. Uniswap eliminates the order book in centralised exchanges allowing users to generate their liquidity. Also, Uniswap allows user to list their coins for free unlike centralised exchanges like Binance that charge high fees to list coins. Similarly, Uniswap being a decentralised exchange means that users have full control of their asset and their funds are protected against hackers.

Conclusion

Cryptocurrency was initially perceived as a digital currency for just buying and selling. Thanks to the advent of DeFi apps which provide financial services to users in a decentralised manner. With the advent of Cryptocurrency, users can be able to access features offered by the traditional financial systems while having full control of their assets.

Thank you professor @yohan2on for the wonderful lesson.

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