#burnsteem25//Steemit Crypto Academy Contest / S4W2 - Decentralized Finance by @rafk.

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Hello my friends. Greetings hope we all good and ready to engage on this weeks amazing challenge. Since I came across this topic, I have been so amaze because I knew just little about it but in the course of this engagement I will learn much and share my knowledge with you my friends.

Without further retard, I will start with what we are assign to write on this week., Decentralized Finance. This a topic of discussion pregnant with knowledge and it's on a broad scheme.

Decentralized Finance

Decentralize finance or DeFi has been the most discuss topic of #fintech space and has divert the attention of many entrepreneurs. DeFI is the technology which is use to stabilized financial services within a decentralized medium.

With DeFi, it provide a direct link between the participants and the finance system, there by cutting of the leverage of passing through a financial institution or bank. DeFi technology is synonymous to the Blockchain technology.

Explain In My Own Words The DeFi World, Why Is It Important? .Let's Discuss About It.

DeFi is quite a broad scope in the finance system and if we have to discuss about it, we should first learn about what DeFi means and the rest of the information follows. Ok! To begin,

What Is DeFi:

The word DeFi is the short of Decentralize Finance. DeFi exist as a financial system built on top of a Blockchain. DeFi generalize services such as borrowing, lending, trading, and other financial services based on decentralized Infrastructure.

DeFi uses an open source network to execute financial product and services. It's notion is to build and operate a financial Dapp on a transparent framework like permissionless blockchains and other peer-to-peer (P2P) services or protocols .

It services my generalize digital assets, protocols, smart contracts, and dApps And to note Defi products are welcome in the market because it provide a complete decentralize system for trustless financial operations . The DeFi system allow users to borrow and, or lend to each other within the system with no central authority involved.

The DeFi system provide us with the following services.

• It create a monetary banking system like the issue of stable coins and and other related services,
• It facilitate financial tools suchs as DEX, predicting markets and derivatives.
• DeFi provide us with a P2P system for transactions or enabling lending and borrowing pools.

Basic Characteristics Of A DeFi Dapp:

DeFi as previous mention is a transparent financial system on the Blockchain free from the government and banks And allow users to perform transaction P2P on the financial system. Below are some of the characteristics of as DeFi Dapp.

• DeFi provide a product or services similar to those of a financial banking system such as borrowing, lending funds through a decentralized P2P channel.

• Users ofDeFi app need to connect their wallets to the decentralized Blockchain network. For instance if I want to connect to the network with my Ethereum wallet. I will do so through metamask

• All users assets on the DeFi network are safe and trusted.

• there is not restriction to using DeFi Dapp. All users are welcomed irrespective of their religion,country and user limits.

• All transactions on a DeFi app are execute through a smart contract and no other third parties are required .

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Benefits Of DeFi:

DeFi being a transparent, trustless, decentralize and permissionless system, it provide the following benefits to us:

• with DeFi, there is autonomy over the ownership of asserts, and meaning your funds, wallet, solely belongs to you alone.
  Therefore, things possible with traditional finance systems, such as banks control, freezing of account or seizure of assets are eliminate.

• Just like steemit wallet keys. DeFi app provide secure private keys to owners and no other person can access their funds.

• DeFI Application provide us with high speed and low cost transactions since it's built on a blockchain

• The DeFi services are continuous and single point failures are eliminated.

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Discuss DeFi Vs Centralized Finance. Advantages And Disadvantages, Let's Talk About Them.

Before the invention of DeFi, Centralized Finance or CeFi was the sole form of trading cryptos. With CeFi all crypto trade orders are handle through a CeFi exchange.

When performing a transaction on a CeFi exchange, funds are runner by specific central exchange and the do not provide any private keys to users. Meaning you funds are not yours yet until the transaction is complete .

Let's get the measure the battle between CeFi and DeFi.

DeFi vs CeFi

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DeFi	CeFi
It users has complete authority over their funds	users are out of user’s custody
Provide Services such as Borrowing, Lending, Payments, Trading	provide, Trading, Borrowing, Fiat-to-crypto, Payments and Lending service
Users Personal Information require Proof of Work	Personal Information embedded in the Framework
Market cap is $16 billion	Market Cap is $324 billion
DeFi Security relies on the technology you are using	CeFi Centralized exchanges are responsible for security.

Advantages And Disadvantages

Advantages of DeFi:

• With DeFi, permissionless protocols ensure that no 3rd party gets involved in the P2P transaction system.

• With the help of a Blockchain ledger all users are allow to see transactions publicly. Hence high level of transparency.

• security with the DeFi application is guaranteed.

• Users are free to trade on external platform.

Disadvantages Of DeFi

• Lack of Central system provide not accountability and users are prone to scams..

• Regulatory risks may arise.

Advantages of CeFi

• CeFi is easy to use

• it provide a wide range of finance services, such as providing direct support to Fiat currency. Hence reasons why they own majority of the market.

• Share the security risk of new users by managing their seed phrase and safe keeping their keys and addresses.

Disadvantages of CeFi

• Users do not have autonomy over their funds.

• Rising problems of regulatory requirements.

• Users are charge high in transaction fees.

Have I used decentralized Exchange? My experience and explain a Decentralized Exchange. Show screenshots.

Yes of course, I have use decentralized exchange, short as DEX to perform transactions on a Dapps like metamask, Trust, etc. The most common being Trust wallet.

DEXs is a P2P marketplace where traders can perform transaction directly without having to hand over their for funds to an intermediate management system. These is done with the help of smart contracts. The most common DEXs are build on the Ethereum blockchain.

There exist 3 main kind of decentralized exchanges which are: Automated market makers(AMM), Order books DEXs (OBD) and DEX aggregators. All of these 3 permit users to trade directly with each other via their smart contracts.

Using DEXs does not require sign ups as the used need just the wallet and then select the network which they want to execute the smart contract and they are good to go. Linking wallets may be through the use of smartphone apps or wallet extension.

Example of wallet extension are the metamask extension of Ethereum wallet on chrome.

_{[screenshot from my browser.]}

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For mobile application we could have it on an app like trust wallet..

_{[screenshot from my trust wallet.]}

My Opinion About The Future Of DeFi.

In recent times the world has revolutionize in terms of trade and the general financial system. Starting from trade by barter, the financial systems gradually find a gradual shift to the traditional finance system which greatly solve measure exchange problems.

With the introduction of the CeFi systems. Trade become more rapid and transfers are more adequate than the previous. This system has provide wide range of exchange in the entire market and is till going on smoothly.

Now we are talking of DeFi which is a finance system with much more high trade advantage than the preceding trade exchanges.

It's ability to mobilize fast trades, provide P2P lending and borrowing on the Blockchain which is something common to the TradFi is great improvement in the #fintech space

I believe if the problems of regulatory risks and accountability are resolved, the future DeFi system is guaranteed. Sooner or later the going to have the market.

CONCLUSION

DeFi has been the hot topic of discussion in the fintech space, and it diverting the attention of potential investor, just like CeFi, DeFi is here to stay and the advantage it provide are just so unanimous.

It market is quite small compare to other finance systems but it will maximize with time. It takes us one inch closer to democratizing the global economy thereby making money and payments universally accessible to everyone else.

I now invite the following to engage with me.

@chiabertrand
@tangwe-rene
@alihussain

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