Why do we need to defy DeFi?

Cheatsheets for myself and anyone who wants it

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I fell into the DeFi rabbit hole recently due to a few stupid reasons

1. I have time (currently looking for a real job)
2. Always believed in using technology to change the way we invest (I’m biased though, I used to work in fintech)
3. Defi is financially rewarding, and arguably can be lower risk than traditional finance
4. I feel like a strong independent woman when I do it

There’s a huge information overload in crypto and that’s so intimidating! So I’m creating this little blog (mostly out of self-interest) where I create cheatsheets for projects, blockchains, concepts in layman English for my own understanding. If I can understand it, then WAGMI (hopefully I got the jargon right).

My mission is to simplify DeFi, or defy DeFi. And hopefully earn some $$$ in the meantime.

What is DeFi (Decentralised Finance)?

• DeFi basically is finance without any intermediaries (such as a central bank, fund manager, bankers etc)
• So instead of intermediaries, smart contracts run whatever finance application you are looking for (such as borrowing, lending etc). All data is captured on the blockchain, which is entirely public
• Anyone can participate in DeFi (bye bye KYC)

What’s in the ecosystem?

There’s so many different protocols (basically projects run by code) — but the main few are:

• Exchanges: or DEXes (decentralised exchanges), pretty much like a FX or stock exchange
• Bridges: You need this to transfer tokens or coins from one blockchain to another
• Lending/Borrowing: Basically banks run by code
• Staking: You lend your coin to validators on the particular blockchain who are using it to verify transactions. You get compensated for lending out your coin to these people. It only works for proof-of-stake blockchains
• Insurance: cover against smart contract vulnerabilities, de-pegging of stablecoins (crypto based on real life assets such as the USD), theft
• Automated Market Makers (AMM): Basically code and people providing liquidity on decentralised exchanges. If you provide liquidity on an AMM, you will get 1) a portion of the transaction fees when people trade 2) a Liquidity Provider (LP) token from which you can use to earn yield from. Pretty cool stuff.

My introduction ends here as I think that’s really all we need to know about its concept. Let the fun stuff begin…..