The cryptocurrency challenge: Diving into DeFi ... DeFi DeFi DeFi
First of all, what is DeFi?
In fact, we can briefly call DeFi decentralized finance. In other words, a formation that is not affiliated with someone or an institution like banks. And a financial system built entirely on blockchains. Oh who could say that Bitcoin's production system would develop this much? In fact, what we all hear is smart contracts and digital assets covered by DeFi. And then there is dApp.
Nowadays, banks may not be found much outside of big cities and districts. For example, there are no banks and no ATMs in the village where the owner of the house where I lived a few months ago. Therefore, when someone sends him money, he needs a cash dispenser to withdraw that money. But since there was no cash machine in the village where he lived, he had to drive to the nearest town and withdraw money from an ATM there. So what will those who do not have a car do? We can say that these are the people that decentralized finance will help. There are more than one and a half billion people in the world who basically cannot access a financial service. DeFi is really useful for these people. Everyone has a phone. And thanks to these phones, they can easily exchange cryptocurrencies.
Another thing that Decentralized Finance can help is people who want to go to work abroad and send money to their home country but find the transfer fee too expensive. Someone working abroad can send cryptocurrencies and convert them to fiat money, except for exceptions, thanks to decentralized finance and blockchain. But for this, you need to use reliable applications, of course. Finding the reliable one depends on our research.
As you know, Cryptocurrencies such as Bitcoin and Ethereum consist of open sources. So, for example, new tokens can be made thanks to the Ethereum network. The protocol standard in which tokens are made and published is called ERC20. The difference of tokens made and issued with ERC20 from Bitcoin is that they do not have their own block chain. In other words, ERC20 tokens are included in Ethereum's blockchain. But this situation can sometimes become more advantageous. The ERC20 protocol might mess your mind, but that's okay. Now, this is not exactly our topic, but I hope I could explain the ERC20 and Ethereum Blockchain.
Why am I excited about DeFi?
The reason DeFi excites me is that it is revolutionizing finance and authority and controllability in the world. As I mentioned above, there is no bank, bank branch or ATM that is accessible to about one and a half billion people or even more. And I gave you a good example in this regard. Thanks to decentralized finance, you can easily transfer money with a device connected to the internet. And this is not like working with banks. In those years, banks were slowly starting to move to mobile and internet banking. Thanks to this, most banks can even close their branches. While there are normally 20 branches in each city, we can say to change this to 1 branch. But decentralized finance has emerged thanks to the Ethereum blockchain and will develop further over time. Perhaps some websites will rival giant banks. This is really exciting.
Best DeFi project: Yearn Finance
I think one of the best DeFi projects is Yearn Finance. In fact, I think YFI is the best in terms of earnings. Because the supply of YFI was only thirty thousand, its value increased this much. They made a vote because they wanted the supply of Yearn finance Token to be only thirty thousand, and as a result of this vote, the supply of YFI was limited to thirty thousand. It is precisely thanks to this that the price of YFI increased to 42 thousand dollars. When we look at the chart, we see that YFI exceeded 30 thousand dollars three times and once exceeded 42 thousand dollars. The most important detail that distinguishes a valuable token like YFI from Bitcoin is that its supply is limited to thirty thousand. Bitcoin is currently about 19 million. The most important thing we need to understand is that the supply of YFI has reached 30 thousand and has stopped. As we know, this caused aggression in the markets.
Another reason why Yearn Finance Token is the best project as I think is that token holders have the right to make changes to the YFI protocol. In other words, if a change is to be made, it is put to the vote and the decision is taken by the majority. The 30 thousand token limitation I mentioned is one of them. In other words, we can say that YFI holders limited the supply because they wanted the token to gain value.
How does Yearn Finance work? So what is the mechanism?
I can say that the YFI mechanism is a bit difficult to understand. But I will try to explain this as soon as possible. Yearn Finance protocol is a DeFi product that benefits token holders. We know that Yearn Finance is trying to provide the best return for YFI holders and making it easy. This project provides lending and liquidity protocols for the best interest rate based on the amount invested. Yearn Finance, which caught fast investors in this way, is now one of the best DeFi products.
The most important thing we need to understand is that the Yearn Finance system has various pools. These pools managed to attract investors thanks to their high annual interest rate. The interest rate in pools for LINK, USDC, USDT and TUSD is 37 percent per year. (Interest rates and types may differ for cryptos, please search!)
As interest pools work thanks to Ethereum, investors are constantly buying Ethereum. So they buy Ethereum and keep it in a cryptocurrency pool with 37 percent interest. I think this will increase the value of Ethereum in the long term. It is not investment advice! This is similar to Binance's announcement of new tokens recently. It is possible to earn crypto money by locking BNB, a crypto currency belonging to Binance, in the savings section of Binance. While the latest BNB was around $ 15, it is now around $ 28.
The future of DeFi:
I think the future of DeFi will be good. Because I think altcoins have been losing value for a while because of DeFi and staying with the value they have lost. I don't know exactly, but I'd like to comment: Steem is now about 16 cents. And he's been walking around this border for several days. Will this price of Steem continue as follows? Or will it go back to around 24 cents? I think it's because people are investing money in DeFi projects. Will it continue like this? Unknown ... I don't know if someone could describe it as a balloon. A few years ago, Bitcoin was also defined as a bubble.
Some experts think DeFi projects keep Ethereum afloat. In fact, they may be right about it. Because we can think of Ethereums held on Yearn Finance site as any example. According to my latest research, about three million Ethereums are held in Yearn Finance interest pools. If one day crypto coins are used in daily life, including shopping, they will not lose value. Or they don't burst like balloons. One day, in this race, we may find cryptos with a specific currency such as USDT make sense. Perhaps one day we would think that independent cryptos like Bitcoin make the most sense without looking at the constant change in value. Is not it? Time passes but nothing will stay the same ...
