What’s the Craze about DeFi 2.0?

DeFi stands for decentralized finance, meaning users can interact with financial products without the need to use a centralized entity and this is made possible through smart contracts.

DeFi 1.0 is the early decentralized financial infrastructure that constitutes the current DeFi ecosystem. It’s a solution in blockchain that seeks to be an alternative to the traditional financial system.
DeFi is automated through Smart Contract which helps to Eliminate Third Parties.
Some of the DEFI 1.0 applications Includes
DEXES (Uniswap, SushiSwap)
Lending and borrowing protocols like (Aave, Compound)
AMM (Yearn Finance)
Stable Coin application (MakerDao)

DeFi 2.0 is the second generation of DeFi protocols, which aims to correct the problems of the first iteration of DeFi.
Defi 2.0 is a movement of projects improving on the problems of DEFI 1.0.

If you’re still wondering whats the Craze about DEFI 2.0, then keep reading
Defi 2.0 research began when users and builders understood Defi’s limits, and this prompted them to find appropriate solutions and consequently each solution was a new innovation and this resulted in upward price action, which is exactly what the Market requires.

Some of the Innovation that have helped DEfi 2.0 expand
-Scability layer 1, Layer 2
-DAOS
-Capital Efficiency
-Smart Contract insurance
-Impermanent Loss insurance
-Liquidity: higher yields, protocol owned liquidity
Defi 2.0 aims to lower barriers to entry and create new earning Opportunities for crypto holders while also improving users experience.
The Next Wave of DEFI could probably be triggered by solutions to the problems brought about these new innovations.

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store