CRYPTO ACADEMY WEEK 7 HOMEWORK POST FOR [@gbenga]||23-03-2021||Introduction to Defi and Yield Farming||by@suboohi
Hi steemains, hope you all are good and enjoying your lives. Today I'm inviting you to review my homework for week6 by @gbenga.
DECENTRALIZED FINANCE(DEFI):
A mode of financial transaction that doesn't involve intermediaries like banks or brokerage is "Decentralised Financing". We can also define as, DeFiis said to be an open source, that is transparent and permisionless for financing.
Another way to explain, we can say that Decentralised Finance is a system of transaction that is built on a blockchain (immutable transactions that are secured by cryptography).
ETHEREUM BLOCKCHAIN :
ETHEREUM is a decentralized blockchain and an open source, that is run with the Ether (ETH) cryptocurrency. ETH was launched in 2015.
Ethereum blockchain ecosystem based on a decentralized blockchain and which turns it to be permisionless and transparent and trust less.More than 200 projects are built on Ethereum.
Ether(ETH) is used as digital currency on Ethereum blockchain for trading. The only second to Bitcoin (BTC) in the cryto world is Ether(ETC).
MAIN FEATURES OF THE ETHEREUM BLOCKCHAIN:
• In this ecosystem no intermediaries or third parties are involved .
• Users get the opportunity to transfer ETHER from one user to another on the Ethereum blockchain.
• The transactions are permanently recorded in Ethereum ecosystem in a ledger, so it is also used to run secure contracts and will help to reduce the risk of fraud in trading.
•They provide afast,quick and reliable transactions.
•They provide auditable and transparent transactions and can be easy to trace activities.
•The transactions are controlled by single authority because transactions are NOT stored in a central server so third party cannot be manipulate it .
WHAT WILL STRENGTHEN ETHEREUM ECOSYSTEM :
• It offers the opportunity of Lending and Borrowing for their users.
• It's a big Decentralised Market Places for trading .
•They offer Monetary banking services.
PROJECT BUILT ON ETHEREUM ECOSYSTEM:
More than 3000 decentralized apps are running on ethereum block chain currently and known as "dapps". Few welknown exchanges are " Dao maker, Uniswap, Axie infinity, chainlinketc, I'm taking an example of "unisap" for homework.
Uniswap:
Uniswap is a well-known decentralized exchange that also based on the Ethereum Blockchain .UNI is Its native token .
It is an open source decentralized exchange which is under the control of a single authority and there is no involvement of third party. Any Change can't be done by any third party except if all the users of DeFi vote for that changes.
These decentralized exchange provide high security and transparency.
Uniswap provides trading of ERC-20 with the support of a wallet like MetaMask. It was built in2018
Main FEATURES OF UNISWAP:
- Any one can create his own decentralized exchange with its code means that it is open source.
• All Users have complete control of their funds.
• It offers highly secure system, as data of any user is not entrusted to any third party
• For trading no intermediaries requires Users can exchange ERC-20 tokens without them.
HOW IT WORKS:
As It is DeFi based so for transactions to take place on Uniswap there is NO central authority or Order book is required.
Uniswap has Liquidity Pool which is created by Liquidity Providers.Once a user has an Ethereum address, he can give to the Liquidity Exchange and make money.
The users that contributed to the Liquidity Pool are rewarded with a token with respect to the amount of their contribution to the liquidity pool.
They charge a fee of 0.30% for trading on Uniswap.The 0.30% of that transaction goes to the reward pool and user will rewarded from the proceeds according to their contribution.
Equivalent ETH and ERC-20 tokens are required for contributions to the liquidity poolwhich you can exchange(Exchange smart contract) or contribute(Factory smart contract) to earn money.
BENEFITS ON UNISWAP(UNI):
•It is FLEXIBLE for trading
• It offers high Level of security.
- It has much privacy and compatibility.
• It is not subject to censorship.
HOW PRICE IS DETERMINED ON UNISWAP:
The price set by the seller or buyer does not determined the price of UNI token.
the price is determined by two ways
•The constant product formula
and/or
•The ratio of tokens in the pool
TO USE UNISWAP:
For trading on uniswap first off user need to have
1* A wallet like MetaMask
2•ERC-20
3•ETHER(ETH)
4•Then start trading by place an order on the number of UNI you wish to buy.
Currently UNI is around $33
CONCLUSION:
DeFi is the best way of transparent and secure financial transactions.
Ethereum ecosystem is highly secure and profitable for trading. Ethereum is the second largest currency of cryptoworld.
Trading in UNI token would be highly profitable in long term. According to the experts it as successful investment.
Thank you Professor @gbenga @steemcurator01 @steemcurator02