Understanding DeFi Learn 9 Popular DEFI Applications

Understanding DeFi  Learn 9 Popular DEFI Applications

SUMMARY KEYWORDS

crypto, defi, blockchain, decentralized, ecosystem, lending, platforms, legos, bitcoin, yield, smart contracts, lending platforms, finance, build, cryptocurrency, applications, create, ethereum, episode, defined

00:01

Welcome to the New To Crypto Podcast designed to guide you through the crypto landscape with pinpoint accuracy created for the new and intermediate crypto investor. Join your host crypto travels, Michael as he takes you through the different facets of getting started and succeeding in your crypto journey. New To Crypto Podcast brings you new episodes daily Monday through Friday with surprise bonus episodes sometimes on the weekend. Let me ask you, are you new to crypto don’t know where to start? Are you more experienced but have questions? Then you’re in the right place. This podcast is designed for you coming at you from the Training Center and the lifestyle design studio. Here’s your host Crypto Travels Michael.

00:52

Welcome to today’s show. I’m excited to be here with you. I wanted to give you a quick update. Since recently launching this show. We now have listeners in 23 countries in over 150 cities spanning five continents, from Kenya, to Lebanon to Greece to Ireland to Malaysia and the Philippines. People are tuning into this show from India, the UK and Australia to New Zealand, Germany, Sweden, Singapore, Netherlands and France. People are joining our community here, I’m looking forward to our journey together. Without further ado, let’s jump into today’s episode.

01:33

Understanding DeFi learn nine popular DeFi applications. So this episode is all about DeFi and understanding and learning about it. So what is DeFi? There’s a lot of talk right now in the crypto industry about DeFi. DeFi is decentralized finance. And it leverages decentralized networks to transform the old system of doing things into a trustless and transparent protocol that runs without anyone in the middle. No intermediaries. 

02:10

DeFi platforms enable users to become lenders and borrowers. And all of this is done in a decentralized way. Defined lending platforms predominantly use smart contracts that operate in an open source blockchain network. Another way to describe defy is that it represents the infrastructure required to innovate current traditional financial systems. 

02:38

The term DeFi covers financial applications and cryptocurrency or blockchain, so it relates to a movement aiming to create an open source permissionless and transparent financial market that works without intermediaries. Let’s go over nine popular DeFi applications. Number one, DEX is you’ve heard me mention these in past episodes, decentralized exchanges, or DEX  or decentralized. Cryptocurrency exchanges allow users to execute transactions without an intermediary platforms which lend by the use of smart contracts or defined lending is number two. decentralized lending platforms provide loans to businesses or the public with no intermediaries. 

03:31

Lending DeFi protocols enable everyone to earn interest on stable coins or other crypto tokens. The next one on the list would be stable coins. Stable coins have become increasingly useful in defining lending protocols. They help provide the needed liquidity and stability in the value chain. Yield farming is the next one. So what is yield farming? 

03:54

Yield farming is the process that allows cryptocurrency holders to earn rewards on their holdings. With yield farming an investor deposits units of a cryptocurrency into a lending protocol to earn interest from trading fees. Some users are also rewarded with additional yields from the protocol’s governance token. So the next one is liquidity mining. liquidity mining is a kind of yield farming in which users of a DeFi product earn additional tokens on top of the regular expected yield. Let’s go into the next one wrapped in Bitcoin or WBTC. 

04:37

A Wrapped Bitcoin is an Ethereum based token that has been created from Bitcoin from BTC in a one to one relationship that can be used on Ethereum, a growing ecosystem of DeFi applications. So with WBTC. Bitcoin holders can engage in lending in margin trading, yield farming in other aspects of decentralized finance or DeFi WBTC is a way to convert Bitcoin into a Wrapped Bitcoin on the Ethereum blockchain. 

05:12

Remember that Bitcoin has its own blockchain. Therefore, Bitcoins are not sent via the Ethereum blockchain. However, now there’s a solution to essentially accomplish the same thing just in a different way. 

05:27

So next on the list is composing new apps, new applications are being built on the ecosystems of some of the largest block chains and crypto. And the beautiful thing is in crypto, that it’s open to everyone. You too can build apps in the ecosystem if you like. The next one is prediction markets. prediction markets are speculative platforms where traders can place bets on the outcome of future events. 

05:56

For example, will the Yankees win the World Series this year? Or will the current president be reelected? The next one is money Legos. It’s financial software built on the blockchain that can be pieced together like money Legos, citing defy pulse calm. defy is like smart money Legos. with Legos, you can start out with a bunch of small breaks, it’s up to you how you piece together the Lego bricks to build something new. The same is true about smart contracts with each new project, product or service launched on aetherium. You have one more money Lego in your collection. And by piecing together existing components of DeFi, you can combine, modify or create powerful new finance tools out of these money, Legos. So those are the nine popular DeFi applications. 

06:53

So you may be asking yourself, what are the top DeFi lending platforms? And I’m going to cover those now and share those with you. So let’s jump into the first one, Maker DAO. Maker DAO is a defined lending platform. 

07:09

The next one would be Uniswap and then AAVE, Compound, Curve finance, WBTC, Harvest Finance, Synthetix, Yearn.finance, and Ren.. Most DeFiplatforms are capable of providing financial services such as investing, lending, trading and more. 

07:31

DeFi platforms are decentralized Ethereum has a DeFi ecosystem. polygon has a DeFi ecosystem .

07:40

Binance Smart Chain has a DeFi ecosystem. And there are others also, some of the others include Solana, Cosmos, and Polkadot ecosystems. A benefit of some of these other ecosystems is the reduced cost with transaction fees 

07:58

On Solana, for example, transaction fees can be as low as 0.00001. So as you can tell, that’s much less than one cent, one us cent. So in 2021, the gas or transaction fees on Ethereum have been extremely high. So these other ecosystems have an added benefit. 

08:24

They have definitely attracted developers for DeFi platforms and applications, as well as end customers. You and I, for example, who may want to lend or borrow, DeFi or decentralized finance are trying to build something different than the original finance system. 

08:41

Decentralized finance aims to create a financial system that’s open to everyone. And it minimizes people’s need to trust or rely on central authorities. technologies, like blockchain and cryptography allow everyone to build and control the financial system without the need for central authorities. There’s an expression in the blockchain industry and it is don’t trust verify, because in blockchain, you can verify every transaction that happens on the blockchain. So that concludes today’s episode, be sure to subscribe to the podcast and tune in tomorrow.

09:22

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