What is DeFi (Decentralized Finance)?

Recently, DeFi, which has become extremely popular in the world of cryptocurrency, means “De” decentralized and “Fi” financial. DeFi includes various applications within itself. These applications allow financial transactions to be carried out directly between two users without the need for a central authority or third party.

Recently, DeFi, which has become extremely popular in the world of cryptocurrency, means “De” decentralized and “Fi” financial. DeFi includes various applications within itself. These applications allow financial transactions to be carried out directly between two users without the need for a central authority or third party.

DeFi’s Goals

DeFi offers an alternative system against the control of central authorities in financial transactions. The main aim of DeFi is to create a new system to carry out financial transactions faster, cheaper, and more freely. Additionally, DeFi aims to provide a more democratic system to people who do not have access to financial systems or who have to pay high fees in traditional financial systems.

Uses of DeFi

DeFi applications are a platform where financial instruments such as borrowing and lending, insurance, investment, and derivatives are traded. DeFi emerged to make financial transactions faster, cheaper, and more accessible than institutions.

Advantages of DeFi

DeFi works without the need for a central authority. This allows users to carry out their financial transactions more autonomously, faster, and with lower commission fees without being restricted by the strict sanctions and rules of governments and institutions.

DeFi Protocols

Most DeFi projects are software protocols that usually operate on Ethereum. They operate in different areas such as lending and borrowing protocols, money transfer, tokenization, insurance, and investment. For example, someone who wants to lend cryptocurrency can earn interest depending on the amount by sending tokens to an address controlled by the protocol. Borrowers can obtain permission to borrow by sending collateral in the form of cryptocurrency.

Uniswap is an example of a popular DeFi protocol that is a decentralized exchange. It allows for the swapping and provision of liquidity for cryptocurrencies.

Aave is another example of a popular DeFi protocol that facilitates lending and borrowing operations with cryptocurrencies.

MakerDAO allows for the creation of the stablecoin DAI, while Curve and Synthetix serve as decentralized exchange protocols that provide high liquidity. Yearn Finance serves users as an investment platform that offers automatic investment strategies, while Lido acts as an intermediary for Ethereum 2.0 staking and helps users earn staking rewards.

In conclusion, DeFi applications provide users with faster and cheaper transactions by offering an autonomous system in financial transactions instead of central authorities. DeFi aims to provide an alternative system to the control of central authorities and to provide security, transparency, and autonomy in financial transactions, which is seen as an important step to address the shortcomings of traditional financial systems.

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