What Is DeFi

What Is DeFi?

DeFi stands for Decentralized Finance in which financial products are made available on a public decentralized blockchain such as Ethereum, Binance and more!

These platforms are open to anyone to use instead of using a middleman such as a bank or brokerage.

However unlike banks and brokerages no proof of address, government id etc are required to start one this can sometimes lead to what is known as a “Rub Pull” where the people or people behind the defi platform shut down and take all of the funds invested.

This is why it’s critical to do your own research and invest into a project only if you truly believe in it and of course don’t invest funds you can’t afford to lose.

“If It’s Both Terrifying and Amazing, Then You Should Definitely Pursue It.”

01

Removal of Middleman

The first key fundamental of DeFi is removal of the middle man aka Banks/Brokers allowing for anyone to now take part  in the lending and earnings.

02

Giving Value

DeFi often times awards native crypto tokens for that platform. This is a representation of the “earnings” of the platform. Primarily this is done through fees collected for transactions that take place on the network.

03

The Future of DeFi

Use cases for DeFi are still being worked on. However a few are starting to be released such as offering easier and lower cost methods of swapping currency from one blockchain to the next. This removes the need for exchanges to sell one asset in order to buy another which is often slow and layered with heavy fees.

Current State of DeFi June 2021

  • Still in beginning phases of evolution
  • Total Value: 63 Billion
  • Expected To Grow Into 1 Trillion by 2022

 

The Future Of DeFi


Marketcap | Projects | Risks

Decentralized Finance is still in it’s early stages. It didn’t become popular until late 2020 but saw decent movement around September of 2020. The future possibilities of DeFi are great and it’s expected to 10x or better in market cap by 2022.

There are a number of future use cases for DeFi and peer to peer lending. However most have not yet been realized or implemented. As the system becomes more advanced we could easily see it replace bank lending and create one of the most powerful transfers of wealth back to the people.

There are high risks when investing in DeFi being what is called “rug pulls” or “exit scams” This happens when the owners or owner shuts down the site without warning and keeps all of the invested funds.

This happens because when investing in DeFi platforms you are sending your crypto to another wallet which is not yours. The old rule goes “Not your keys, Not your crypto”

  • This article is for entertainment purposes only and not investment advice. Consider all risks before investing and don’t invest anything you can’t afford to lose. The writer of this article owns crypto and has stake in any or all listed cryptocurrency within this article.

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