Crypto Academy Week 7 - Homework Post for [@Gbenga] (100% powered up)

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DeFi which is a short word for Decentralized Finance, is a term that contains all kinds of applications and protocols that exists in public blockchain programmed to disrupt the old centralized traditional finance ecosystem. It is been powered by blockchain technology, it can also be explain as financial applications that is built on blockchain technologies, that uses smart contracts to perform it's transactions.

Smart contracts can also be said to be an agreements that is automated to be enforced and do not need a mid man to execute transactions and also is accessible by anyone. It is made up of applications and p2p protocols that were built on a decentralized blockchain ecosystem that needs no permission to access it. This makes it easier to lend, borrow, or trade financial instruments. A huge percentage of the DeFi applications are built on the Ethereum Blockchain.

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Ethereum Defi Ecosystem

Ethereum is open to be accessible for all, no matter your location, just only own a wallet to participate in it. It is an open access to digital currency and also data services for all, irrespective of background or location. Ethereum is community built technology that is responsible for the cryptocurrency ether (ETH), with huge number of applications as well. To access a traditional finance is not an easy task because you need to go through some protocols. But with Ethereum what you required to access products is just an internet connection and you will have access to Ethereum lending, borrowing and savings products.

All your personal data is not required before you can use Ethereum applications. It is based on economy value and not surveillance. It gives you the opportunity to move money and make agreements, with anyone directly without intermediary companies. No body, company or government has control over it. Because Ethereum is decentralized, that's why no one can stop you from receiving payments or using it's services.

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HOW ETHEREUM WORKS

Smart Contracts
Smart contract is just a code that runs on Ethereum ecosystem and is automated enforceable. It is called a contract because it have the ability to control valuable such as ETH or other coins/Tokens.

Proof of Work
Ethereum uses a Proof of Work and allows the Ethereum ecosystem to be in agreement with the information recorded on the Ethereum network, and this helps to prevents some economic attacks on the Ethereum network. The network consist of nodes and they runs client software that are compatible.

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DECENTRALIZED EXCHANGE: UNISWAP

DEx which stand for Decentralized Exchanges remains one of the fundamentals of DeFi, it gives users the opportunity to exchange or swap tokens with other digital assets, without an intermediary and with no extra cost..

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Uniswap

Uniswap is one of the leading decentralized exchange and built on the Ethereum Blockchain. Uniswap was established by Hayden Adams in 2018, and remains the largest enforceable automated token exchange based on trading volume on the Ethereum network. Uniswap was established after grants from numerous capital organizations were received. It automates enforceable transactions between cryptocurrencies using the Ethereum Blockchain smart contracts.

How it Works*

UniSwap has currently three services, which includes :-

1. Swapping tokens
2. Adding liquidity
3. Removing liquidity.

Swapping Tokens

1. All you are required to do is that you have to create account on Metamask, so as to have opportunity to use this service

2. After creating your Metamask account, then you can now select the token of your choice and swap it for another token.

Adding Liquidity

1. If you wish to supply liquidity, then you have to deposit that token value to it's exchange contract.

2. When you have set your tokens for liquidity, then you have to add it into a pool on the UniSwap interface.

3. Your Liquidity on UniSwap will earn exchange fees, that will now be calculated based on the value of digital assets you deposited into that liquidity.

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Removing Liquidity

Your liquidity on UniSwap will be removed just by clicking on the Remove Liquidity button from the drop-down menu, and your liquidity will be removed from the pool.

UniSwap Token: UNI

The governance digital assets of UniSwap decentralized exchange is UNI, this Gives all the holders of UNI a say in the project's development and treasury. The Uniswap governance digital assets was established in September 2020 and The protocol rewarded everyone who has used Uniswap before September with 400 UNI.

Conclusion

The DeFi is up and running, which in no distance time it will catch up the traditional financial ecosystem. Though some obstacles are certain while operating new innovation but it haven't be able to hidden DeFi. DeFi is now on the right path to be a successful innovation, but it's a very difficult task to predict or say how DeFi will be, the time all financial services have been fully decentralized. This nascent financial technology will be a fundamental part of a new financial system that will realizes fast, secure, and available to everyone.