Mar 22, 2023
8
How to accept crypto payments
Why do you need to accept crypto payments today? Some reasons to provide crypto payments. How to buy and pay with Bitcoin? All the advantages and disadvantages of accepting payments in digital currency.
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Mar 15, 2023
Today, DeFi and blockchain technology have become an integral part of the cryptocurrency economy and counterparts to the traditional financial system. Now people store money in a secure digital wallet and conduct financial transactions in seconds without intermediaries and third parties. Anyone with a stable Internet connection can use the DeFi application, plus it’s very convenient and transparent.
So we will be discussing a very important and relevant topic of DeFi work. DeFi is likely to be the fastest-growing trend in the cryptocurrency industry in 2023. That’s why both beginners and experienced crypto enthusiasts need to know how decentralized finance works and who can benefit from it.
This is a publicly available ecosystem of financial services and apps based on public blockchains (mostly ETH). DeFi also works without any centralized authority. DeFi covers all aspects of financial services and financial transactions (it can also be lending, borrowing, and trading).
At a time when the government is trying to centralize all financial services, a solution based on blockchain technology is just perfect. Any user can interact with decentralized finance and manage assets through P2P and dApps. Let’s take a look at all the major advantages of DeFi right away:
So, DeFi refers to a new financial system built on blockchain technology. In DeFi, apps are created using smart contracts on a blockchain, allowing for control and management of financial services or transactions without the need for third parties.
The DeFi ecosystem also consists of crypto assets, such as tokens, and stablecoins. Users’ funds are stored in digital wallets. All transactions here are quick to execute, there is no long chain of brokers. This is convenient for deposits and lending. For example, the lender doesn’t have to share the profits with the bank, which accepts deposits at one interest rate and gives loans much higher.
However, despite the many advantages, such financial services on blockchain technology also have their drawbacks:
In addition, this ecosystem is also characterized by instability. Finding the most appropriate app can be difficult, and users must have a certain skill set to choose the best option.
DeFi’s primary goal is to change the conventional financial system, which relies on centralized institutions to facilitate transactions. Thanks to these technologies and open-source DeFi protocols, more people have access to new financial services, exchanges, and platforms. DeFi also helps users earn money on cryptocurrency assets and save on transaction costs. To make it easier to understand, let’s look at all the DeFi uses and how it works:
Let’s also talk about other ways to use this technology. You already know that stablecoins are cryptocurrencies whose value is tied to a fiat asset. MakerDAO, for example, offers another model of stablecoins. The issuance pattern of Dai’s stablecoins can be compared to gold-backed money. The distinction is that ETH cryptocurrency is used instead of gold.
Now let’s talk about exchanges, in this case, DEX (most people today have confidence only in these exchanges). It is a decentralized exchange, which doesn’t keep funds and users’ info on exchange servers. Such an exchange acts solely as a platform for matching orders to buy/sell cryptocurrencies.
The system of these exchanges works in such a way that each transaction is conducted between users directly, and the exchange doesn’t access/store the crypto of its clients. Such exchanges offer a new model of crypto trading and exchange. One of the most successful and actively developing decentralized exchanges is Uniswap.
DeFi is also used to create prediction markets, services, and games (items in these games are usually non-fungible tokens that can be sold). The number of these projects is steadily growing. Some DeFi protocols enable liquidity mining and yield farming. The last concept refers to any action aimed at obtaining crypto for some kind of activity. It can be giving or taking credits, providing liquidity. Farming has gained a lot of popularity because of the opportunity to earn a good income.
Before you try to make money on a project, you need to analyze how dangerous it is to invest tokens or other digital assets there. This is where the TVL can help. One indicator of a project’s sustainability is how much funds other users currently have in its contract. Let’s understand what TVL is and why you should always pay attention to this indicator.
TVL shows the amount of blocked or frozen crypto funds on the project’s smart contract or liquidity pool. In other words, when you see the TVL abbreviation, it means how much cryptocurrency is currently invested in that particular project. The higher the number of funds, the better and safer it is for the potential investor.
With a high TVL, there is no risk of a sharp collapse of staking/farming. There will not be a situation where multiple users who have invested their tokens will take them out, sell the accumulated cryptocurrency and leave you with nothing. The more frozen tokens — the more people are interested, supporting, and developing this crypto project.
In a world where states are trying to centralize all transactions, this technology comes in handy. Now DeFi offers many of the same services as banks, including earning interest, borrowing/lending, buying insurance, trading derivatives/assets, and more. However, this technology is faster, more efficient, and doesn’t require extensive paperwork or a third-party intermediary in transactions.
Today DeFi could provide financial services and transactions that are more accessible, and inclusive. All applications are accessible to anyone with a smartphone or computer. This eliminates the need for a physical bank branch and allows people to participate in financial activities from anywhere in the world. Now, cryptocurrency is opening up new opportunities for innovation and growth in the financial area. So, this is a real contrast to ordinary banking, where a central government controls the system.
BTC is considered a decentralized digital currency, but it is not a comprehensive DeFi on its own. However, some DeFi applications may use BTC as a form of collateral or payment.
Mar 22, 2023
8
How to accept crypto payments
Why do you need to accept crypto payments today? Some reasons to provide crypto payments. How to buy and pay with Bitcoin? All the advantages and disadvantages of accepting payments in digital currency.
May 18, 2023
0
Ways of using widely spread social networks like TikTok for crypto promotion.
As you may know, one of the most popular kinds of investment today is crypto. Owners of cryptocurrencies are lobbying for the adoption of it as a widely accepted currency to exchange. Not everybody agrees with this, though. The fact that TikTok previously prohibited any materials relating to crypto makes this especially clear. Thus, their […]
Mar 21, 2023
4
DeFi liquidity
Why is DeFi liquidity so important today? What are liquidity pools and how do they work? All you need to know about liquidity providers. What are Liquidity Pool (LP) tokens?