Are DeFi projects committed to what they claim?
Review on DeFi system which helps users to go further than restriction-stay with us in this article!
Introduction
Due to the quick and positive development of the cryptocurrency market, more people intend to invest in it day by day. But anyway, one of the main points to begin, especially in financial affairs is our familiarity with its basic concepts. DeFi is one of the most widely heard concepts in the digital currency market. But one of the main thing that one must consider to start operating in any direction, especially in investing and trading digital currency, is familiarity with its basic concepts.
What is DeFi?
Decentralized Finance (DeFi) is a financial-based technology that can manage financial services (such as loans and transactions) with no oversight traditionally needed from the banks and institutions.
Banks and financial institutions have controlled the world’s financial system for as long as we know. In the traditional financial system, when we want to receive or send money, we need an intermediary called a bank to do this. But in many cases, these financial intermediaries commit corruption or unintentional mistakes that endanger the property of many people. However, we need an intermediary to transfer money that we can trust.
Thanks to Blockchain, a decentralized financial system or DeFi has been created to prevent such issues. This function has been replaced with the financial intermediary we transacted through formerly.
DeFi offers different features
As mentioned earlier, the vital function of DeFi is to remove financial intermediaries like any financial institute. In other words, DeFi is an encrypted version of a stock brokerage; but that’s not all.
Besides the main function which was explained in detail, DeFi also includes features such as lending platforms, Dex, Daaps, etc. It sounds like people who are into cryptocurrency affairs, intend to build another version of Wall Street.
DeFi advantages
*Easy access with no geographical restriction
*Loan system
*transparency
*security
*monetary banking services
- programmable
Join Coinmonks Telegram group and learn about crypto trading and investing
What is the DeFi platform?
If you have already answered the question of what DeFi is, then it will not be that hard to find out the concept of the platform as well.
DeFi platforms connect borrowers to lenders which eliminates the Identity check process. This way, Blockchain technology allows the other party to receive less risky services and also offers cheaper and faster loans without geographical restrictions. In other words, DeFi platforms allow people to borrow from others, considering the price changes, trade digital currencies, take advantage of DeFi insurance against risks, and make at last.
DEX; A decentralized exchange
Decentralized exchanges are the platforms and programs that enable traders to buy, sell, and exchange digital currencies against Fiat or other digital currencies. These kinds of decentralized exchanges are vital for tokens and ecosystems, as many of them allow payment in Fiat currencies. People who do not have cryptocurrencies can also buy cryptocurrencies in dollars, euros, etc. through these exchanges.
Popular decentralized exchanges include PancakeSwap, Uniswap, Tokenlon (V2), 0x Protocol, Venus, Sushiswap, BurgerSwap, Curve Finance.
What are DeFi’s disadvantages?
* Smart contract addresses vulnerability
* Poor user experience
* Scalability
Conclusion
At present, 99% of cryptocurrency transactions still go through centralized exchanges. But this situation is supposed to be reversed in the upcoming years and many transactions will take place through decentralized exchanges. Decentralized finance is still in its infancy and the eco-system may get stuck in some immoral behaviors like hacking and any kind of fraud that might take place through the bugs. However, if you intend to work in this field, you’d netter talking to experts first and keep in mind that this market requires a lot of risk against the rewards it offers.
(Author: Fariba Khazaei)
