An Analysis Of The Various Applications Of Decentralized Finance System (DeFi)

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Hello fam,

It is your favourite blogger @mato445 and I am happy to make this interesting post in this community today.

We will be examining the various applications of decentralized Finance (DeFi).

A plethora of new financial opportunities are being made possible by the fast expanding field of decentralized finance, or DeFi for short, within the digital currency and blockchain ecosystem. With Defi, financial services are delivered via decentralized networks and protocols as opposed to centralized organizations like banks, offering a completely new approach to conventional financial systems. Several new applications that arise from this innovation are transforming our understanding of investment and financial services.

• SUPPLY & BORROW:

Platforms for lending and borrowing are among the most common applications of Defi. With the help of blockchain-based smart contracts, people may lend and borrow digital assets like Ethereum, Polygon, and TRX through platforms like JustLend, Compound, and MakerDAO. Compared to conventional lending and borrowing platforms. these platforms provide a variety of advantages, such as less transaction fees, quicker transactions, and higher levels of security and transparency.

_{Screenshot From JustLend}

Users can supply their assets and get rewards at a certain APY depending on the assets supplied. There's also option to borrow loan or asset, paying back the borrowed loan also comes with a certain APY depending on the assets.

• DECENTRALIZED EXCHANGE:

Another important application of DeFi is decentralized exchanges (DEX). With DEXs, users are able to swap digital assets without the requirement for a centralized middleman in a decentralized and trustless ecosystem. More security, transparency, and asset control are just a few advantages this offers over conventional centralized exchanges. Users can trade or swap cryptocurrency without a middleman or kyc on a number of decentralized exchanges. Among these DEX are SunSwap on the Tron Blockchain, PancakeSwap on the BSC Chain, and numerous others.

• STABLECOIN:

Stablecoins are another common application of DeFi. Stablecoins are digital currencies that, by being tied to the value of a traditional currency, such as the US dollar, lessen the volatility of more well-known cryptocurrencies like Bitcoin and Ethereum. Because of this, stablecoins are becoming more popular as a means of exchange inside the DeFi ecosystem and are a more dependable investment alternative. DAI is an Ethereum-based decentralized stable coin that is built on blockchain technology. This helps maintain and save money for investors while also helping them avoid volatility.

• PERPETUAL TRADING:

The lsst on today's application of DeFi is in the development of new financial services and products, such as perpetual trading, which lets users profit from coin price predictions. With perpetual trading, you can choose to sell(short) or buy(long) coins based on your prediction. You anticipate a decline in the coin's price if you are shorting it and an increase in value if you are longing it.

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This is done on DEX platforms without the need for kyc or intermediary.

• REAL WORLD ASSSETS:

Tokenizing physical assets like commodities, artwork, and real estate is another application for DeFi. By facilitating their easy purchase and sale on the blockchain through tokenization, these assets become more accessible to a larger group of investors. This may raise the liquidity of these kinds of assets and create new investment opportunities.

Investors can utilize DeFi to produce or tokenize their real-world items or assets, which can then be listed on the Decentralized NFT platform and sold or listed on DEX for day to day trading or perpetual trading. We have seen several NFTs that represent real-life assets, you can check out RWA section on coin market cap to see the list of real world assets.

_{Screenshot From CoinMarketCap}

To sum up, decentralized finance is transforming the way we think about money and investing by creating a plethora of new applications. DeFi is opening up a lot of new options for people, companies, and organizations, including supplying and borrowing platforms, stablecoins, decentralized exchanges to swap without kyc, earning money by via perpetual trading. We anticipate seeing many more intriguing and different applications surface in the future as the DeFi ecosystem develops more.