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It is my first assignment in the Cryto Steemit Academy community grateful for this initiative that encourages us as students to be proactive and analytical regarding Blockchain technology. Thanks to professor @yohan2on for the detailed explanation of topic 4 on decentralized finance, it definitely makes for an easy-to-understand guide for both experts and beginners.

Introduction to Decentralized Finance (DeFi)

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As the statement of the task indicates, decentralized finance has become a true revolution in financial technology, and it is that DeFi, the acronym for "decentralized finance", is being the financial engine that has shaken the world of cryptocurrencies.

With DeFi gaining more and more traction every other day, the traditional financial system is under serious threat of being dissolved by the recently emerging decentralized financial ecosystem. @yohan2on

The financial system is one that allows the circulation of money between individuals. We can say that DeFi are financial services that are executed by algorithms that use cryptocurrencies (blockchain technology).

Lawyer Rodrigo Caldas de Carvalho Borges, a founding member of the Oxford Blockchain Foundation, defines DeFi as "programs that determine rules and metrics that, once achieved, trigger self-execution."

Unlike the traditional financial system that execute their agreements through third parties that are regulatory intermediaries, such as financial institutions, custodians or central banks. The DeFi act without intermediaries, through smart contracts, that is, through automated and enforceable agreements between the parties. Advocating in this way, for a decentralization system above all things.

There are dapps or DeFi financial products, based on a decentralized culture. Among them are the most relevant:

• Maker
• Compound
• Synthetix
• bZx
• Uniswap

Next I will give a brief explanation of the function of each one.

Maker:

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It can be said that Maker is one of the most ambitious projects of Decentralized Finance (DeFi). It is a decentralized system that provides new financing options in the blockchain financial ecosystem through a single stable currency called DAI (like a new recent multi-backed MCD version), in this way highlights the potential of a robust structure in Ethereum, allowing any user to exchange their tokens for DAI in a simple way without being affected by the volatile ether market. In addition to allowing them to earn money by making loans or savings.

MAKERDAO works by integrating all its parts, complementing each other, thus creating the community that it is now.
Those who choose to contribute to credit assets earn interest that generates passive income.

• MAKER protocol: It is a protocol that runs on the ethereum blockchain through smart contracts. Thus allowing control of your DAI currency, in addition to managing Maker Vaults, oracles and votes within the entire system.

• The DAI Stablecoin: As I mentioned earlier, it is the only Maker currency, which does not depend on banks or intermediaries for its operation. It has relevant characteristics above other currencies, reserves its value, exchange medium, unit of account, deferred payment reference.

• Collaterals: DAI can collateralize with different types of tokens.

• Maker Vaults: they are the warehouses that keep the tokens that act as collateral for DAI.

Compound

It is a loan window in the Decentralized Finance system. This project offers a dapp that allows reciprocal action between creditors and debtors. Allows any user to deliver or borrow Ethereum tokens through a decentralized marketplace.
Lenders receive interest on cryptocurrency loans borrowed according to the protocol.

Meanwhile, borrowers pay interest on what they borrowed and can place cryptocurrency savings as collateral for that loan, the interest rate of which is dynamically adjusted according to online supply and demand.

Compound uses its native currency, cToken (cBAT), for creditors and borrowers.

Another aspect that we can know about Compound is that unlike other DeFi platforms, the interest rates are not fixed, as they are based on the dynamics of the market.

Synthetix

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A decentralized payment system in which users can trade directly in a stablecoin built on top of the Ethereum network, creating synthetic assets. These synthetic active ingredients are called "Synths".

These assets can be synthetic gold (sGold), bitcoin (sBitcoin), sUSD, sEther, and sSilver, in addition to other fiat currencies.

To interact on the Synthetix platform as users, we must first acquire their native SNX tokens. Once the SNX tokens are available, synthetic tokens can be minted, through different exchanges.

bZx

The bZx Protocol is a decentralized platform based on Ethereum, built for loans and margins, and transactions leveraged on DeFi.

Unlike the other decentralized protocols we have studied that have a single stablecoin, bZx has three usable tokens: iTokens, pTokens, and BZRX tokens.
Its creation in 2018 and its operations stable for a couple of years, it suffered security breaches, resulting in three hacker attacks in 2020, losing credibility with its investors.

The bZx protocol team in addition to working with developers and auditors to improve the security of the platform, they offer returns of 25% to 45% on ether deposits, thus attracting investors and lenders.

Uniswap

In the DeFi revolution, the Uniswap app has not lagged behind as a decentralized protocol, standing out for having a different operating system, allowing those who want to exchange cryptocurrencies can also collaborate for a liquidity group. In this way, it solves a problem that often haunts decentralized exchanges: lack of liquidity.
Uniswap rewards its liquid contributing users with a reward based on the percentage of the amount they make available.

The Uniswap protocol founded by Hayden Adams in 2018. His DEX enables non-custodial trading of standard ERC-20 tokens through a software or hardware wallet. It launched its token called UNI on September 16, 2016, a token that will serve for the governance of the protocol.

Focuses its functions on two important points:

• Provide a decentralized medium of exchange (DEX) to its users:

Although Uniswap works like the exchanges that we are used to using, what is relevant at this point is that the control is in the hands of the users and that due to the large base of users and liquidity providers (LP) of the platform, there is alway a quick response to exchanges.

• Provide a means to create an automated liquidity protocol (AMM).

Uniswap works under a design called Constant Product Market Maker (CPMM). What this operating model does is create liquidity buffers with which traders can quickly trade.

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Some research sources:

*https://research.stlouisfed.org/publications/review/2021/02/05/decentralized-finance-on-blockchain-and-smart-contract-based-financial-markets

• https://makerdao.com/es/

• https://compound.finance/

Thank you for joining me in my study on DeFi