Welcome to week two of the crypto academy competition for this season. The topic for this week is DeFi, or decentralised finance. a brand-new, cutting-edge type of banking made possible by the development of blockchain.
It is clear that our daily life is full of transactions of assets, mostly in the form of currency. With the era of crypto currency or Bitcoin, Satoshi Nakamoto is said to be inspired from anonymous mask movement. The Vendetta mask or the anonymous mask is the memory for the movement started after Cold War. In which people started asking governments and official for the transactions and corruption. During that movement people had lost believe from banks that use to hold and run your money. People started to ask themselves that are they really want these suited persons to run their money. Or any trust-less platform will be better. Amidst this much talks Satoshi came up with idea of blockchain which is DeFi, peer to peer and most importantly trust less.
DeFi or Decentralised finance is very useful for autonomous and peer to peer usage. DeFi is very important because a DeFi world is basically yours but still connected to everyone. In other words a world where you do not need to trust people with suits. You can make your own transactions to whomever you want. And every transaction will have a record. This record thing is very useful because in todays world we know how officials are very prone to corruption specially in under developed worlds. Therefore these all things are useful.
In this part we’ll compare both, DeFi and centralised systems. This will include both advantages and disadvantages of both.
| DECENTRALISED SYSTEM | CENTRALISED SYSTEM |
|---|---|
| This is trust less system. | This system includes trusting people with suits |
| DeFi Exchanges run on voting system and every member has right to vote. | Centralised system contain an entity making every decision. |
| More secure against exchange’s frauds. | More secure against coin’s frauds. |
| Peer to Peer sharing. | Contain central entity for transferring amounts. |
| More transparent. | Less transparent. |
These are the main features of both systems. According to these feature user can chose any of it for himself.
I haven’t really used any DeFi exchanges, reason behind it is recent news about frauds in DeFi platforms. Let us understand what is DeFi exchange.
DeFi EXCHANGE
DeFi exchange is an exchange for crypto currency based upon decentralised manner. Well how does it work? It is peer to peer transferring of funds without centralised entity with trust of yours as a custodian. So how does it make make decision or changes? It based upon voting of the users. And the other question is how does the ones who do changes gets paid. Well with every transaction user must’ve to paid some amount of fee to the exchange in its own currency and that currency use to pay to the works of exchange among which the most important is security of the exchange.
DeFi FUTURE
Before we discuss DeFi future we must understand DeFi is the future. It is a futuristic idea that will overtake every system to some extent. Because it shifts users from products to earners. When we use Web 2.0 apps such as FB we are the product but when we use any Web 3.0 platform we earn. We earn for our talent, for our knowledge and for our abilities. It is not far when DeFi will be in use of our daily life. People are already earning a lot by DeFi pools and DeFi staking and I believe it can evolve many other different opportunities in future. As I said. It Is The Future
DeFi creates a new financial system apart from the current conventional banking system. DeFi will present new competition for other funds offer. DeFi's effectiveness could be increased by DeFi. DeFi must develop a financial system that surpasses others in terms of security and dependability. Hopefully DeFi will lead to fresh advancements.
For this, I invite @huzaifanaveed1 @malikusman1 @steemdoctor1
regards,
@abdu.navi03
More gains to Crypto Culture🔥. Reshared🔁
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You've given a good explanation of the Defi. Whe you say that Defi is the future, I somewhat agree to it but I think there's still a lot to work on before labelling it as the future of financial system
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You have provided your understanding of Decentralized finance and the difference between DeFi and CeFi. DeFi has a quite clear advantage over CeFi just as you said that, no involvement of third parties makes DeFI more reliable with no corrupt practices. Thank you for sharing.
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DeFi is more transparent than CeFi and has many advantages over DeFi. While CeFi is still controlled by other financial institutions or commonly called third parties. I also shared a post about decentralized finance, if you have time please see it and I am very happy.
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Your explanation about the decentralised finance system is quite good. The decentralised finance exactly the future of the world's economy. There are many benefits of the system over the traditional centralised finance system.
Thank you for sharing with us and wishing you a very happy contest.
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Yes the DeFi exchange contain native tokens. The native tokem holders are are conferred voting rights proportional to the token they stake and are thereby gicen chance to vote on any decisions made on the exchange.
Good luck
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