Crypto Academy Week 4 // Decentralized Finance Systems// Submitted to @yohan2on

This week's lecture is quite interesting and relevant to the cryptocurrency industry, @yohan2on.

It's DeFi all the way Prof. It's taking over, centralization will soon be a story of the past.

source

What is DeFi
DeFi meaning decentralized Finance is a form of finance which does not require any central government, or body, bank, etc, to perform operations but rather uses smart contracts to execute commands. A smart contract on the hand carry sets of codes which can be executed if certain conditions are met.

Homework task

Briefly explain each of the following DeFi apps
Maker
Compound
Synthetix
bZx
Uniswap

Marker
A marker can be described as Etherum based organization in which the Dia and the marker token operate. Dia is markers stable coin. A stable coin is that coin that maintains its price, same as the USD . Marker exist to normalize, stabilize the price of Dia against its dollar counterpart.
Peraventure the value of Dia increases Marker will create more tokens to stabilize the marker, or in a scenario when the market is too saturated, it burns more Dia until the price normalizes with that of Ether (1 USD). Marker has what it takes to ensure the both in inflation or deflation it can maintain the price of Dia at 1 USD (thanks to smart contracts) that why it can also be called an utility token.

MKR token is the Governance token for Marker, and holders are able to vote for decisions made on the network as well as implementing policies that will be profitable, CDP fees for the creation of Dia are paid using MKR.

Compound
Compound is a fully decentralized project built on Ethereum Blockchain, it allow trader users trade by lending and borrowing cryptocurrency. The lenders in turn earn interest in form of token while the borrower pays on the borrowed value.

Since it fully decentralized, no third party or intermidiary is need to perform its transactions but rather uses a multi crypto asset for its service. Once you make a deposit with the intention to lend, you immediately receive what is called the ctoken, which can be withdrawn, transfered and traded. All these are fully automated, thank to smart contract codes.

There are two very important users of compound:

1. Lenders
2. Borrowers

COMP is utilized by compound as its goverance token, this tokens are used as incentives to borrowers. It can also be used for voting on proposals, or perhaps you don't want to vote, it is possible to transfer your voting power to someone else to vote in your behalf.

Synthetix
Synthetix are Decentralized protocol built on the Ethereum blockchain, which are fully powered by smart contracts. They are responsible for issuing synthetic asset to users, also track and provide returns with even holding the assets. A synthetic asset is such that has the same value as another asset. By assessing synthetic product, you are also give access to non-synthetic asset which can be traded.

SNX, its goverance token can be used to create other synthetic assest when given to them as collateral. It can also be used as collaterals.

Bzx
BZx is a fully decentralized margin lending and borrowing platform built on the Ethereum blockchain. BZx protocol is smart contract based as they are fully decentralized and automated, with the goal of making everything tokenized. No intermediary required.

The biggest difference between bZx and others in their field is the three tokens it uses: iTokens, pTokens, and the BZRX token. Each of these tokens plays a vital role in how bZx operates. source

When you lend or supply funds, you are awarded with itokens, and borrowers with the ptokens.

The governance token BZrx is used to vote as well as stake token to earn more tokens. They can also be used to pay fees.

Uniswap
Uniswap is a decentralized protocol built on the Ethereum blockchain. It is one of a kind, as it has various intresting upgrades added to it. It is fully decentralized and so does not have a need of a third party control. It allow users to swap between ERC-20 and other Etherum tokens.

source

It is powered by smart contracts as it utilizes the Automated Market Marker(AMM), thereby eliminating the need for an order book. It allow users to give liquidity in pools but the smart contracts is not still limited in this regards as it employs the automated Liquidity Protocol.
UNI is the governance token of the Uniswap, which can be used to vote for project upgrades, or new project, and even towards the removal of an existing project.

What a wonderful project, but affected by high fees on the Etherum blockchain.

It will be a privilege to participate in your next homework Prof. @Yohan2on.
Thank you.