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Hello All,

_Source

DeFi

What is DeFi?

Before explaining about Decentralized Finance(DeFi), I would like to show you below key points of comparisons between Decentralized Finance(DeFi) and Centralized Finance(CeFi), this small comparison will give you an entire idea about DeFi.

_{DeFi vs CeFi}

Decentralized Finance(DeFi), is a next-generation financial network to take the centralized financial functionality into trust and transparent protocol which will be executed without a mediator or any Third Party Services.

If we see the current financial system, when we want to open a new account to any bank or if we want to a loan, invest money, put the money into the Fix Deposite, so we have to visit into the banks and provide multiple documents, this is all physical activities.

The financial system and all its services are completely centralized. Banks, stock markets, insurance companies, and other financial institutions all have someone in charge, whether it be a company or a person, that controls and offers these services.

In the current financial system, there is no transparency which plays an important role to build trust. Currently, we have many examples of banks that created Non-Performing Assets(NPA) which affect the normal bank account users that their money went at the risk and they got a limitation in withdrawing their own money which means users have no control over their own money.

Due to no transparency, we are unaware that on what basis the bank has provided a loan which effect when non-payment by the borrower.

Decentralized Finance (DeFi) allows anyone to take a benefit of these all financial services in a trustless and transparent manner. It refers to financial services using smart contracts, which are automated enforceable agreements that don’t need intermediaries like a bank or lawyer and use online blockchain technology instead.

DeFi is offering you control of your own assets. Many banks and fintech firms promise to provide more control to the users, in reality, we are still trusting in them to manage our funds. The DeFi is to give you full control of your assets, and it can because of decentralization and blockchain technology.

What excited in DeFi?

Within Defi, we can store, trade, and invest their assets in blockchain securely and earn a good return than from the traditional financial system. Since there no middleman for handling our assets, we have complete control on our investments.

Just like a bank, users can deposit their money and when someone else borrows the digital assets they earn interests. However, instead of intermediaries, here the smart contracts dictate the loan terms, connect lenders and borrowers, and are in charge of distributing the interest. Due to the inherent transparency of the blockchain and no middleman, the lender earns higher returns and more clearly understands the risks.

What are Contracts?
Defi process works on Smart Contracts, it's basic lines of code that are stored on a blockchain and automatically execute when certain conditions are met.

Borrow and lend
As a part of Defi service, we can Borrow and lend cryptocurrencies to earn interest. Lending and borrowing platforms require a price feed to ensure the total value of the collateral.

DeFi Projects

_{defi_projectsThis Thumbnail creeated from snappa.com}

Alternative Savings Apps:- DeFi Alternative Savings Apps are aiming to improve and simplify onboarding experience for third-party DeFi lending protocols. They are introducing DeFi savings products to non-crypto native users and act as an alternative interface for lending protocols.

Analytics:- Analytics is the discovery, interpretation, and communication of meaningful patterns in DeFi protocols data; and the process of applying those patterns towards effective decision making.)

Asset Management Tools:- In the traditional financial system custodian, it is a specialized institution responsible for safeguarding a firm’s or individual’s financial assets and is not engaged in commercial or consumer/retail banking. In DeFi you and only you are a custodian of your own funds and assets. We collected the best DeFi friendly wallets, apps, and dashboards for managing your cryptocurrencies and assets.

Decentralized Autonomous Organizations(DAO):- A DAO, or Decentralized Autonomous Organization, is a concept for a organization that is ruled with forced digital rules and directly controlled by shareholders without hierarchical management. DAOs involve a set of people co-operating according to a self-enforcing open-source protocol.

Decentralized exchanges:- A decentralized exchange (DEX) is a cryptocurrency exchange which operates in a decentralized way, without a central authority.

Derivatives:- In traditional finance, a derivative is a contract that derives its value from the performance of an underlying entity. This underlying entity can be an asset, index, or interest rate, and is often simply called the “underlying.”

DeFi Infrastructure & Dev Tooling:- Protocols, frameworks and underlaying technologies for building decentralized finance dApps with DeFi network of money legos.

Decentralized Insurance Platforms:- Insurance is a practice or arrangement by which a company provides a guarantee of compensation for specified loss, damage, illness, or death in return for the payment of a premium.

Decentralized Identity:- KYC is an abbreviation for Know Your Customer refers to government regulations designed to prevent money laundering, financing terrorism and other crimes involving money. It also refers to the policies, procedures, and technology used by banks and financial services companies to comply with KYC regulations.

DeFi Lending:- Decentralized lending platforms provide loans to businesses, or the public with no intermediaries are present. On the other hand, DeFi lending protocols enable everyone to earn interest on supplied stable coins and cryptocurrencies.

Margin trading:- DeFi crypto margin trading refers to the practice of using borrowed funds from a broker to trade a financial asset, which forms the collateral for the loan from the broker. Usually broker in DeFi it’s one of autonomous money markets.

Marketplaces:- An online marketplace (or online e-commerce marketplace) is a type of e-commerce site where multiple third parties provide products or services.

Payments:- DeFi payments apps, protocols and solutions focused on creating an open finance ecosystem that caters to the needs of institutions, as well as the underbanked and unbanked populations.

Decentralized Prediction Markets:- Prediction markets are exchange-traded markets created to trade the outcome of events. The market prices can indicate what the crowd thinks the probability of the event is.

Stablecoins:- Stablecoins are cryptocurrencies created to decrease the volatility of the coin’s price, relative to some “stable” asset or basket of assets. A stablecoin can be pegged to currency or exchange-traded commodities.

Staking service providers:- PoS networks use validators who create, propose, or vote on blocks added to the blockchain. From the customer point of view, Staking is similar to interest savings account in a traditional bank. In DeFi, infrastructure service providers such as staking pools and Staking-as-a-Service providers play the role of the bank, running nodes for decentralized PoS protocols on behalf of investors.

Tokenization of Assets:- Through tokenization, investing is cheaper, faster, more secure and available every hour of the day. This opens up real-world assets and the world of cryptocurrencies to people who previously may not have been able to invest due to geographic or financial restrictions and offers an alternative to traditional and largely outdated investment methods.

DeFi Lending Rates

_{DeFi Rates}

Let's Take A Look At How Defi Booooom Currently.

We will check the current status of Defi on DeFi Pulse site. This site will give you the latest analytics and rankings of DeFi protocols and track the total value locked into the smart contracts of popular DeFi applications and protocols. Also, this site provides you the collection of the project list which are the best resources into the Defi, so it will be easy for us to select the project which will be suitable according to the budget.

All Time High

_{DeFi Pulse}

March 2020 it was at 562.916M however, at the end of September 2020 it reaches 11B. The price action move like a rocket in just the last 6 months.

One Year High

_{DeFi Pulse}

90 Days High

_{DeFi Pulse}

Till the date, the total investor has locked their amount into the DeFi is $10.31B.

_{DeFi Pulse}

Also, it will provide you the details about all running projects and the total locked amount in each project which easy to identify to know the best one for us.

_{DeFi Pulse}

So, what is DeFi?

DeFi stands for “decentralized finance” and acts as a financial ecosystem that is built on top of blockchain technology. It is a collective term for services like investing, borrowing, lending, trading, and other financial services based on decentralized, non-custodial infrastructure.

DeFI provides a completely decentralized option for a trustless financial system. There are different types of lending and credit platforms within the DeFi space. These projects employ different strategies to allow users to borrow from and lend to each other with no central entity involved.

Feature

Below are some features that differentiate public blockchains from the private networks used by current financial institutions.

1. Permissionless: Anyone in the world can connect to the network
2. Decentralized: Records are kept simultaneously across thousands of computers
3. Trustless: A central party isn’t required to ensure transactions are valid
4. Transparent: All transactions are publicly auditable
5. Censorship Resistant: A central party cannot invalidate user transactions
6. Programmable: Developers can program business logic into low-cost financial services

Note: Working with DeFi Projects, we have to be very careful with our keys that we use to authenticate, once they lost you cant recover and your investment will be in risk.

Thank You.
@stream4u

#steemcryptochallenge
#india
#defi
#decentralizedfinance

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