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Introduction to Decentralized Finance (DeFi) - the Profitable Future of Finance

Learn about the future of finance with this introduction to Decentralized Finance (DeFi) - the disruptive technology revolutionizing the financial service industry.

In this article, we will provide a beginner's guide to decentralized finances and additionally, we will discover a lot of benefits of decentralized apps as part of DeFi instead of centralized finances. Understanding decentralized finances and their basis is the main goal of this article.

Decentralized Finance(DeFi)

This blockchain technology provides the possibility to exchange cryptocurrency, lend and borrow tokens, and perform transactions without centralized services such as a bank or any financial service. There are a lot of DeFi platforms on the internet for these purposes.

History of DeFi

The history of Decentralized Finances comes from the beginning of Bitcoin (launched in 2009) and Ethereum (started in 2015) the most famous cryptocurrencies. Since 2017 Ethereum has started to maintain smart contracts. Currently, the smart contracts are the basis of DeFi.

2017 ICOs provided the possibility to fund financial projects for individual investors and even organizations. AAVE and peer-to-peer asset exchange network 0x are good examples of it.

In June 2020 one opportunity to borrow and lend different cryptocurrencies on decentralized exchange services appeared. By Compound Finance DeFi protocol this opportunity came to life.

Key Details

DeFi provides decentralized applications (DApps) for performing transactions on distributed ledgers (decentralized data sources). As in centralized exchange, there is no need for some centralized administration of data. In this case, the financial transactions may be performed between peers by using smart contracts or DeFi.

Risks and Downsides of DeFi

DeFi transactions do not support rollback operations and in cases of the wrong recipient or loss of private key or password hacked the crypto assets will be lost. Using DeFi services must be performed with a very careful approach to security and knowledge. Traditional finances in this case may provide more benefits in such cases. Additionally, you should remember that in the past many DeFi projects were scams themself.

Exchange in DeFi

The DeFi ecosystem provides a lot of opportunities to exchange crypto assets. Decentralized exchanges (DEX) allow peer-to-peer transactions and different operations. See the most popular DEX list below.

Most Popular Applications

Let's discover some top DeFi projects:  PancakeSwap, Uniswap, Aave and so on. As we can see DeFi works with different crypto assets.

Trade Digital Assets

DeFi allows trade by your digital assets around the world via the internet. DeFi crypto may be traded on DApps listed above with specific coins supported by each platform.

Get a Crypto Wallet

Additionally, you can trade and have a digital wallet on Binance. There you can find a lot of crypto pairs like BTC-USDT, ETH-BNB, etc. One way of passive income is staking crypto, this option you can find as well on this exchange platform.

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