DeFi or “Decentralized Finance”
DeFi or “decentralized finance” is an term used for financial services on blockchains. With DeFi you can easily do the similar things that bank support (even without paper work) like earn interest, borrow crypto, trade assets and many more.
It is faster then the normal banking and easy to use and does not required any paperwork. DeFi is decentralized means it does not controlled/routed through a centralized system similar to the blockchain. Defi operated global (without any boundaries) and opened for all and may be between two people (i.e peer to peer).
The assets are stored in secured digital wallets and anyone with internet connection can use the DeFi (transfer the finds to anyone in minutes).
In centralized finance system the banks or financial institutes hold the money and the movement of money between parties has been facilitate by third prates and they change for using the services.
Eliminating the intermediaries by directly allowing the users to do the financial transections through the emerging technology is the basic idea of Decentralized finance.
How Does DeFi Work?
Decentralized finance uses the blockchain technology that cryptocurrencies use. A blockchain is a distributed and secured database or ledger. Applications called dApps are used to handle transactions and run the blockchain
It is combination of Security and Transparency. Every transection which is also known as smart contract published on blockchain are available to everyone to review without revealing the identity. The smart contract or transection on blockchain can not be changed.
Passive Income and APY
The Decentralized Finance provides a number of ways to users to generate income. Earning a passive income is one of the common and my favorite also. The crypto in DeFi world does not just sit in your wallets it also generate passive income for you. It is similar to the interest generated by your bank deposits. Now days the interest on bank deposits are getting down day by day but in DeFi world their are projects which enable users to earn 20% APY (Annual Percentage Yield). HBD saving is the perfect example for same.
Earning By Staking
This is another way to earn in DeFi world. Staking means locking your cryptocurrency/tokens and you will get the benefit in terms of airdrops or daily payout form pool till the time you will hold the cryptocurrency/tokens in staked conditions. Many new projects used this technique to reduce the liquidity for the market and pays to the users who locked their assets. SPS staking aand daily airdrop of SPS in Spliterlands (play2earngameon Hive blockchain) is one of the perfect example for same.
Play2Earn is the concept which pay for playing the games. In DeFi world their are some very popular and successful projects which works on Play2Earn methodology and Splinterlands is one of such name which is a card game on Hive blockchain and each card is unique NFT . In Play2Earn the users will get rewards in term of token, NFT or coins which are tradable and backed by the blockchain technology. Some of the NFT has been sold for thousand of dollars so you can the idea that the market has good demand for NFTs.
Earning form Blog & Vlog
Blog and Vlog in DeFi world provide the opportunities to the users to earn from their writing and video contents. One does not have to invest a tons of dollars to start, even with a free account, a user with good writing skills can earn decent amount. Their are projects like Hive, Blurt, noise.cash, which provide the platform for writers and video content creators.
Yield Farming and Liquidity Pool
Locking the crypto or token through a Dapp in certain project and earing a portion of fee and interest from others who used the find across the platform is Yield Farming.
Providing the liquidity in any pool is also a way to earn crypto. The users provide the liquidity to a pool by locking the tokens in pool and letting other to use the same. The percentage of transaction fees are the earning form Liquidity Pool.
Investment & Trading
Purchasing crypto/token/NFT in initial stage and holding the assets for long term for good returns is crypto investment and purchasing for short term and selling for profit is Trading. Similar to the share market the crypto assets can also be trade for profits. Their are many exchanges which provide the trading facilities for their users in crypto.
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