Crypto Academy Week 7 - Homework Post for professor @gbenga about /Introduction to Defi and Yield Farming/ answered by @cryptocheta
Hey Steemians! It is another cool week of lecture, hope we all are learning? like I always say " we learn every day" is very important from what I have seen in this week's Crypto Academy. As always, I enjoyed the lecture of @gbenga about " Introduction to Defi and Yield Farming
Decentralized Finance (DeFi)
Source
DeFi stands for “decentralized finance” and also refers to the ecosystem comprised of financial applications that are being developed on top of blockchain systems.
Also, DeFi can be defined as the movement that promotes the usage of decentralized networks and also open-source software to generate various types of financial services and products. This idea is to develop and also manage financial DApps on top of transparent and also trustless frameworks, such as permissionless blockchains and other peer-to-peer (P2P) protocols.
Currently, the three biggest functions of DeFi are:
Creating monetary banking services (examples are the issuance of stablecoins)
Enabling advanced financial instruments such as derivatives, DEX, tokenization platforms, and predictions markets
Providing peer-to-peer or pooled lending and borrowing platforms
Inside those three fields, there are various types of DeFi services. A few other examples of products and use cases include software development tools, funding protocols, index construction, subscription payment protocols, and data analysis applications. DeFi dApps may further be used for AML, KYC, and other identity management services.
Decentralized finance (DeFi) brings various benefits when compared to traditional financial services. By the use of smart contracts and distributed systems, deploying a financial application or product becomes much less complex and also secure. For example, many dApps are being developed on top of the Ethereum blockchain, which also provides reduced operational costs and lower entry barriers.
One of the Project of DeFi is UniSwap
Uniswap is a decentralized finance protocol that is used to exchange cryptos. Uniswap is also the name of the company that originally built the Uniswap protocol. The protocol supports automated transactions between crypto tokens on the Ethereum blockchain through the usage of smart contracts. October 2020, Uniswap was considered to be the largest decentralized exchange and the fourth-largest crypto exchange overall by daily trading volume. March 2021, Uniswap was generating fees of roughly US$2–3 million daily for the liquidity providers who promote liquid markets for the cryptos being exchanged.
Uniswap was designed by Hayden Adams, a former mechanical engineer at Siemens.
The Uniswap company raised millions of dollars from venture capital firms including Paradigm Venture Capital, Andreessen Horowitz, Union Square Ventures LLC, and also ParaFi. The Uniswap average daily trading amount was US$220 million in the month of October 2020. Traders and also investors have utilized Uniswap because of its usage in decentralized finance.
In the month of April 2020, Uniswap's website was taken down momentarily after some hackers unsuccessfully strived to use a reentrancy hack on the exchange.
The Uniswap is a decentralized finance protocol that is used to exchange cryptos and tokens, and it is provided on blockchain networks that are decentralized, running open-source software, as opposed to any centralized intermediary. This is in opposition to crypto exchanges that are run by centralized companies such as Binance, Coinbase, and OKEx.
The changes to the protocol are voted on by owners of native crypto and also governance tokens called UNI and then implemented by a team of developers. The UNI coins were originally distributed to early users of the protocol. Each Ethereum address that had communicated with Uniswap before September 1st, 2020, has received the ability to claim 400 UNI tokens (which worth roughly $1,400 at the time). While the market capitalization for the UNI token is above $500 million as of October 2020.
Protocol
Uniswap utilizes liquidity pools preferably than serving as a market maker, also in contrast to centralized exchanges, to create more effective markets. Individuals and bots termed "liquidity providers" give liquidity to the exchange by adding a pair of tokens to a smart contract that can be bought and sold by other users. As a result, liquidity providers are provided a percentage of the trading fees earned for that trading pair. For any trade, a certain amount of tokens are removed from the pool for an amount of the other token, whereby changing the price. No fees are expected to list tokens that allow a large amount of Ethereum tokens to be accessible and no registration is needed for users. The Uniswap code can also be forked to create new exchanges, similar to how forks occur with open-source cryptos.
Conclusion
Summing up, the DeFi movement is shifting traditional financial products to the open-source and also decentralized world, which eliminates the need for intermediaries, reduces overall costs, and also greatly improves security.
I have really enjoyed this week7 homework and hope that the points are clear.
Written by @cryptocheta
Thanks to you professor @gbenga
cc: @steemcurator01
cc: @steemcurator02
cc: @steemitblog
cc: @steemchiller
Thanks for being a part of my class and for participating in this week's assignment. I hope you learned from the class as the aim of the school is to teach and allow people to learn alongside.
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You should write original content, picking part or all of another author's content without quoting and properly referencing is regarded as plagiarism.
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Source: https://academy.binance.com/en/glossary/defi
Oh it's was a mistake I had so many materials on my laptop it was confusing, so maybe that is how I mistakenly used it, and am not sure I used any material from that link you posted. But it has never happened B4, so it a little error that I need to correct, and please do read our posts early so that we can make corrections. I didn't use any material from Binance. I have corrected the error, but there is no plagiarism on my post, please.
#steemitblog #steemcurator02