Steemit Crypto Academy Lesson Week 7 By @gbenga || Decentralized Financial Ecosystem || Homework Submitted by @talktofaith
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Decentralized Finance Ecosystem
Defi (Decentralized finance) may be seen as a financial application built on the blockchain technologies using smart contracts. Defi also consist of a collection of specialised Services based on smart contracts and decentralized applications (DApps) that make up a Decentralized financial ecosystem and provides users with a variety of financial services such as ingesting, lending, trading on stock exchange etc, without trusting centralized financial institution and companies. The services of Defi are provided 24hrs per day without restrictions due to active development of the blockchain technology.
In the Defi, the relationship between parties are not trust worthy but at the same time, parties has the ability to interact without intermediaries in form of financial institutions.
Advantages of Defi
It is accessible to any user 24hrs per day, regardless of geographical location.
It is a transparent kind of transaction. The blockchain is 100% transparent.
The software interface is so flexible and convenient for all users.
It is open to all. It allows users to directly interact with applications through browser extensions and also provides the users the ability to create their own applications.
Focus of Defi
Decentralized Lending:
This is a service provided by the Defi which allows users to lend and borrow crypto assets. The Lending offers users a new way to earn interests on free assets.
Decentralized Exchangers:
Defi enables users to exchange crypto Currencies without the interference of centralized exchanges
Stablecoin:
Most crypto currencies has their values pegged to a unit of Fiat currencies and backed by other Currencies like BTC, ETH, gold and other valuable assets, in other to minimize volatility.
A Project Built On Defi
Compound:
It is a decentralized blockchain based protocol that allows users to lend and borrow crypto currencies and have a say in it's governance with it's native COMP token. It is primarily concerned with the financial services of borrowing and lending of cryptos.
Compound is a protocol built on Ethereum blockchain that forms money market in the form of pools of crypto assets with algorithmically determined interest rate based on demand for a given asset. Both lenders and borrowers interact directly with the protocol earning a floating interest rate without the need of going on so e conditions such as maturity, interest rate or the Collateral amount.
Compound is governed in a decentralized way through Community voting. Anyone with at least 1% of delegation COMP token has the right to participate in the management of compound, regardless of whether they owns this token or not.
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@gbenga, this is my homework post submission.
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Thanks for being a part of my class and for participating in this week's assignment. I hope you learned from the class as the aim of the school is to teach and allow people to learn alongside.
This post didn't contain much information about Compound or Comp which is its native token. Sharing more about the token would have been greater help to people who wanted to understand the Defi Protocol.
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