Steem Crypto Challenge #2: Diving into Defi, My First Entry
DeFi means Decentralized Finance. This is a financial system that is open source, thus it requires no third party in carrying out any transactions.
Let’s look at it in contrast with the banking system (Centralized Finance).
First the centralized financial system
Here, the bank controls who bank with them. They control the amount of money you can withdraw at a time, the time of transactions to be done and the person you transact with.
If you want to get a loan, for instance, you need to bring someone to sign as a surety and give them a collateral before the money is released.
The centralized finance (banking system) also has the government as it’s watchdog. The government of the state can decide to intervene in anyone’s transactions.
In extreme cases, government can order the freezing of an individual’s account, thus rendering the owner of the money penniless.
Don’t get me wrong, in some cases the decision comes as a result of criminal investigation of the individual, but in most cases, they give extreme orders out of suspicion and at time it turns out to be as a result of rumours or some mixed up.
In either case, families and businesses suffer from such orders.
In Nigeria, for instance, we have a government agency called EFCC (Economic and Financial Crimes Commission). They monitor every banking transaction.
Thus, it’s normal to receive a call from them if five million naira (N5,000,000) enters your account. They’ll call to ask what kind of business you are doing, what is your relationship with the sender and a whole lot of investigations for your own money.
Decentralized Finance (DeFi)
Now, here comes DeFi. As earlier stated, DeFi does not involve third party in an individual’s account.
What this means is that, there’s no central banking hall where people sit down to track your personal trasactions and get paid every month just by monitoring how much you receive, how much you withdraw, how much you send to someone and what business you are doing to bring such money to your account.
Thus, DeFi is a financial system that removes the limits to how much money you can play around with your money. This is to say that DeFi is a totally free financial system.
On if I have bought a DeFi token before
My answer is no. Me lack of DeFi tokens is not out of refusal or ignorance of it’s potentials, but because for now I don’t have money to invest. I hope to buy some soon in the future.
My Excitement About DeFi
I’m in love with the limitless opportunities that DeFi provides for everyone in the crypto space. There are a lot of millionaires today that are made from this program.
I remember last month; some people were made rich from free airdrop by Uniswap. Unfortunately, I lost out because I have not traded with them before.
But I see the future of DeFi and that got me excited because there’s room for me to come in with my investment anytime I have the resources.
I have set 2021 as the year of my investment in the DeFi project of my choice.
The best DeFi project?
For now, I’m still researching. The word best is wide when it comes to DeFi, because for the project to be the best, there are a whole lot of qualities to posses ranging from usability, acceptability, among others.
Mechanism of DeFi
DeFi projects are built on smart contracts. They are free from any intermediaries and are based on enforceable agreements using the blockchain technology.
On DeFi projects, one can:
Borrow money
Lend money
Stake money
Create and exchange derivative of any asset
Bet
Take part in loss-free lottery
Buy or sell cryptos
My Feeling About the Future of DeFi
I’m a big fan of DeFi. DeFi is the financial revolution the world has been waiting for. I believe in it and I’m eagerly following the trend of development in the DeFi system.
Thank you for reading. But can we make steem a DeFi project?