Let’s talk about DeFI decentralized finance. What is it, why is it important and why do you need to know more about it?
Then afterwards, the concept money of Lego, very interesting and a thing that highlights the power of defi. We’ll look at a few use cases, how decentralized finance applications can be used.
We’ll look at some current apps and see what they can do and then I’ll highlight some benefits that you can have when you use decentralized finance and why you might find it very interesting to move into some of these apps.
Try them out and see if they work for you.
I think you can benefit a lot from that.
Last but not least, I’ll give you my opinion and I’ll explain to you exactly why I believe decentralized finance, this whole landscape is part of the future of finance.
Very exciting topic. I’m super pumped about this and if you find this valuable, I really like if you hit that subscribe button, hit the like button.
So I’ll cut to the chase.
As always you’ll find all the timestamps in the description below. Decentralized finance includes financial smart contracts, protocols, and decentralized applications.
Many of them at the moment are running on Ethereum, but you’ve also got decentralized finance tools on Bitcoin or other blockchain platforms such as EOS or Tron and then a nutshell decentralized finance is financial software that can be put together like Lego. There is a term for that called money Legos.
I think that’s very, very interesting. And it highlights some of the strengths of decentralized finance software, money, Legos. The core philosophy of the DeFi space is to build for interoperability.
Basically what that means is that the whole ecosystem can benefit from each individual application in that space. Each application is not just for himself in one corner, but they all work together to help each other.
I think that’s one of the most powerful aspects of the DeFi space. So you can imagine a big box of Legos and then you would like go inside, look for the different pieces that you want to use to build what you have imagined and each little piece solves one problem and when you put them together it solves one big problem and that is great because it doesn’t mean you have to reinvent the wheel for each time you want to make a new application.
DeFi projects are basically designed to not only be used as a standalone product, but also easily integrated into products that can benefit from their functionality. This is the best DeFi products at the moment. So you can imagine each one of those as a separate Lego block. So here you’ve got many things, such meta mask you’ve got uPort hydro constant many, many different types of projects, some that you might be already familiar with, such as maker, you’ve got some stable coins, USD coin WBTC which is wrapped BTC.
Each one of those represents one Lego brick that you can put together.
So now I just bring you some examples of what I mean with these Lego bricks compound, which uses one Lego brick is the maker DAU CDP tool.
Then you’ve got the dai as a brick and accustom compound, smart contract and all these free combined together is then the compound.finance software which allows you to put money away to, to lend to other people and other people can borrow that money. So that’s just one example. The next one is Zereon.io Which uses several bricks. It uses a maker dau CDP tool the compound brick the uniswap brick the metamask IAM token trust wallet, Coinbase wallet and tokenary and all these together create the zereon.io app and as you can see you can the only limits that you have is basically your creativity.
If you imagine one tool and you look for each individual piece that resolves one specific problem, which altogether then delivers a financial tool to you useers at the moment in traditional markets, each financial tool, each financial institution is basically creating tools for themselves. In my opinion, that’s not a very future thinking process.
FinTech versus defy. I mean, FinTech has also been trending quite awhile in the last few years with a lot of traditional financial tools being evolving in the direction of FinTech.
The, the current advantages of FinTech are, for example, it’s much more efficient at the moment.
There’s a higher performance, it’s a lot more customer friendly, but there are certain defy advantages defi is permissionless. There is no censorship and the transaction services can’t be stopped. There’s a lot more interoperability like I just mentioned before with the money of Legos.
So I think a lot more people are going to be able to benefit from this software as a quick example, someone with a smart phone that has maybe just one, ethereum can already benefit from many different financial tools that he otherwise would not be able to benefit from in a traditional system where you might need a bank or you’ve got a much higher barrier to entry because you maybe need to a lot more funding to be able to start with certain financial tools such as, for example, leverage trading where you very often need a much higher amount of capital to even be able to start.
We’ll have a look at some of the use cases of decentralized finance. You’ve got the open lending protocols, you’ve got issuance platforms and investing. You’ve got decentralized prediction markets, auger is an example for that. You’ve got exchanges and open marketplace is very often now, so do not need any KYC and you’ve got the stable coins.
So we are on the defi.pulse Website. You can see here you’ve got the total value of locked USD in decentralized finance. And that amount is growing constantly each day and has been growing constantly since last year. We have currently 788.4 million us dollars locked in decentralized finance. And I think that’s just mind blowing and it just shows how this trend is growing. And I don’t think you’re too late to enter to understand what this is all about. And I think if this is, these tools are something for you. Now down here below you see different projects, decentralized finance projects. Many of them are on the Ethereum blockchain here you can see the chain that they’re on. There’s a lightning network which is on Bitcoin and that is also one of the decentralized finance tools in this landscape, but many of them are on Ethereum at the moment.
I’ll add the link to this website down below so that you can check it out in peace. What you can also do here is click on the DeFi list to access a list of current decentralized finance applications and you can also try them out and look if you find them Interesting. I would just highlight a few ones that I think are pretty interesting, such as you’ve got Augur as a decentralized Oracle and peer to peer protocol for prediction markets. Then you’ve got compound, which is an open source money market protocol on ethereum that lets users lend and borrow assets against collateral. You’ve got DYDX, which is a leverage trading platform. You do not need KYC for that. I think that’s fantastic that you’ve got these options. You’ve got flexor, which is a payment network that enables merchants to accept digital currencies without the risk or fraud of volatility.
Lightening network a layer two protocol on top of a bitcoin, which facilitates peer to peer transactions. Then you’ve got maker is a decentralized credit platform on ethereum that supports dai a stable coin. You’ve got monolith a decentralized banking, alternative powered by ethereum. Nexus mutual is a decentralized insurance platform where people can share risk.
Set protocol, which I think is very, very interesting. I’ll talk about that in that in one of the videos that I’m releasing in the next few weeks, cause I think there’s very interesting, and it’s a protocol designed to create, manage and obtain baskets of tokenized assets.
So you can basically buy one token and this token acts more or less as a trading bot based on one indicator. So you can have a rebalancing trading bot where you’ve got 75% ethereum, or a 75% BTC and 25% of a stable coin to rebalances depending on the market fluctuations. Fantastic.
I’ll talk about that in a next up video. So make sure that you hit that subscribe button so that you can stay up to date with the current trends in decentralized finance. Because I’m definitely going to be talking a lot more about decentralized finance.
It’s a fantastic and interesting topic. You’ve got uni swap is a fully decentralized on chain protocol for token exchanges on a few rooms that uses liquidity pools instead of other books.
Then you’ve got WBTC is an ERC 20 token backed by one Bitcoin. Very interesting as it allows users, investors a lot more flexibility when using an ERC20 token you can participate on the ethereum blockchain, but still have the security and store of value of Bitcoin.
How can you benefit from decentralized finance? Well at the moment you can of course use the tools, you can use the trading tools, the apps I mentioned and you can also learn a lot more about it.
I think that’s, it’s the future. So learning a lot more about it now gives you a headstart. Learning how you can invest your money in a smart way.
Understanding compound interest is very valuable, especially if you start investing small amounts of money, the compound interest is just a snowball that just keeps on growing and it’s just a very powerful tool.
My opinion on why I believe this is the future of finance. There’s a lot more financial tools. The interoperability, basically these Lego blocks he can put together to create even more tools. I think that’s fantastic and just gives a lot more options to the investor, to the retail investor, and you can also start with much lower amounts of money.
The barrier of entry for many different types of people is much lower.
They can start with a smartphone very often KYC is not necessary, so people that maybe need a solution, an investment solution that works for them the most basically those people with not a lot of money, well, they can benefit from this because it’s global it’s permissionless. You just need a smartphone.
That’s already a fantastic reason why decentralized finance is going to be the future of finance. I believe this is just the beginning of the decentralized landscape. It’s a growing trend.
So if you like these types of topics, if you like decentralized finance, if you want to learn more about this, then join me on this adventure. And yeah, I’m looking forward to the next bull run, so I want to prepare you for that.
I think decentralized finance is, going to help you a lot in preparing for the next bull run. So join me on this adventure. Hit that subscribe button,
I catch you on the next videos. See you soon. Bye. Bye.