Academy
Lets start with the basement – What is DeFi?
Decentralized Finance (DeFi) is a sector within blockchain that offers financial services without central authorities, using smart contracts on blockchains. It enables transparent, permissionless financial operations like trading, lending, and borrowing directly between parties.
What are smart contracts?
Smart contracts are like automatic rules on the blockchain that do what they’re supposed to do when certain conditions are met. Think of them as self-operating digital agreements that don’t need a middleman. They make transactions secure, transparent, and efficient, which is especially useful in DeFi (Decentralized Finance) for things like making payments or giving out loans.
What is the difference between a coin and a token?
Coins are digital currencies with their own blockchain, like Bitcoin or Ethereum. Tokens, on the other hand, are digital assets that operate on an existing blockchain and offer specific functions or rights.
What is a stable coin?
A stablecoin is a type of cryptocurrency that is pegged to the value of another asset, such as a fiat currency or gold, to maintain a stable price
So with all these basics learned:
what exactly are the Functions of DeFi?
Swap Function
Swap functions in DeFi allow users to exchange one cryptocurrency for another without the need for a traditional exchange. This process is facilitated by smart contracts on decentralized platforms, providing a seamless and direct way to trade different tokens or coins.
Liquidity Pools
Liquidity pools in DeFi are collections of funds locked in a smart contract, used to facilitate decentralized trading, lending, and other financial services by providing the necessary liquidity.
Money Legos
Money Legos in DeFi refer to the concept of composability, where different financial protocols on a blockchain can be combined and used together seamlessly, like interlocking blocks, to create complex financial services and products
Lending
Lending allows users to lend their cryptocurrencies to earn interest or borrow against their crypto assets. This process is automated and transparent through smart contracts on decentralized platforms
Bonds
DeFi bonds are digital debt instruments on the blockchain that generate interest income for investors and are characterized by their tradability on decentralized platforms.
Dual-VE Tokenomics and the Vote System
The dual-ve system in DeFi introduces two types of assets, promoting long-term participation by rewarding users for locking in assets. It aims to create a mutually beneficial environment, contrasting with single-ve systems by avoiding a zero-sum game.