Steemit Crypto Academy Week 7 Task: Introduction to Defi and Yield Farming | Uniswap Protocol | lecture by @gbenga

Hello, esteemed Steemians. I am glad to be here again for deep learning at the Steemit crypto academy and I have the privilege to learn from the crypto professor @gbenga as he discussed Decentralized finance for the week 7. There was a task associated with the great lecture and I will be working on that in this context. Be my guest!

Before I roll in fully into the context, I will like to give a brief explanation of decentralized finance (DeFi) and how it has shaped the finance ecosystem.

Decentralized finance is the new finance sector that has come to displace the centralized protocol used by the local banks, brokerages, exchanges and many more. Decentralized finance is aimed at bringing in notable innovation into the crypto system by eliminating the presence or involvement of third parties in transactions.

As opposed the centralized protocol whereby the users crypto wallet keys are held by exchanges, decentralized finance eliminates that given users full control (self-custodian) over their assets and making the process of buy/sell, swapping, exchanging and other transactions easy without the involvement of third parties or submission of orders.

Few of the benefits of decentralized finance are; displacement of third parties in transactions, enablement of liquidity (where users can easily swap their assets without submitting orders), self-custodian for users, incorporation of DApps that enables user to interact with various other DApps and many more. In this context, I will be talking about a protocol on decentralized finance which is Uniswap.

As a decentralized protocol, Uniswap is a decentralized platform with a built-in DApp on the Ethereum blockchain which offers easy swapping of ERC-20 tokens for others. This great liquidity feature has enabled many users all around the world to adopt Uniswap and it has since been relevant since it came into existence in the year 2018.

Uniswap is fully decentralized such that each nodes in the network works on its own without receiving orders from a centralized server, which is a characteristic feature of centralized finance. Uniswap offers the easy liquidity of ERC-20 tokens without the involvement of third parties in the process of transacting and so therefore makes the process of buy/sell, exchanging, borrowing a easy process as order books are not created as seen on exchanges.

Few of the features of Uniswap you should know about are; It's fully decentralized, easy swapping of ERC-20 tokens without the involvement of third parties, no order books are created (it offers instant swapping that reaches the destination after confirmations), it give users full control over transactions, it eliminates the presence of criminality as users interact with the DApp independently, it supports smart contracts which enhances automated transactions. Those are a few benefits of Uniswap you should know while we still have many others.

UNI is the Uniswap tokens which was introduced in September 2020 and according to study it was distributed to users that has in one way or the other interacted with the Uniswap protocol either by exchanging ERC-20 tokens on the platform or has once acted as a liquidity provider.

The system of governance practised on Uniswap protocol allows all UNI token holders to participate in the decision making as regards the usage of treasury or future upgrades on Uniswap protocol such that they determined by holders of UNI as it is decided by governance vote, which all UNI token holders are eligible to participate in the process of this decision making.

Liquidity providers deposit to the Uniswap pool using smart contract and the liquidity funds serve the purpose of easy exchange of assets by other users without creating order book and this is made possible by Automated Market Marker which gives price quotes to traders utilizing the deposited tokens by the Liquidity providers. Liquidity providers earn on their assets deposited into the liquidity pool.

At this stage, let's talk briefly on how to use Uniswap.

I will be exploring this feature of interacting with Uniswap DApp through the in-built DApp on Trustwallet.

In conclusion, Decentralized Finance (DeFi) is the new world in the finance and crypto ecosystem which has brought a lot of benefits to the ecosystem by eliminating third parties from transactions and Uniswap is a notable protocol built on the Ethereum blockchain that offer the provision of liquidity of ERC-20 tokens using the Automated market maker to quote price to users utilizing the tokens deposited by Liquidity providers, thereby eliminating creation of order book for buy and sell characterized with exchanges that operates on centralized protocol. Many thanks to professor @gbenga for this great lecture as I've really learned and explored a lot. Thank you all for reading.