DeFi Products - Crypto Academy / S4W8- Homework Post for @reminiscence01

QUESTION 1:

ANSWER 1:

a) In your own words, explain DeFi products and how it is shaping the present-day finance.

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First of all let's start with the small introduction of DeFi, DeFi is the short form for Decentralized finance, It provide it's users to use the facilities provided by Decentralized technologies, It offers financial services to it's users without going through the third parties which makes it Decentralized and a transparent system.

The product that are made over a blockchain without the requirements of any third parties for doing transaction are known as DeFi product, Over these blockchain various DeFi projects are successfully running and gives various unbelievable benefits to it's user., DeFi products are the tools that are developed for completing a specific objective.

The potential of the DeFi to provide financial services without involvement of any third parties and keeps the transactions transparent and visible for everyone, This is how these DeFi projects perform and new users are joining this DeFi products and taking the benefits of its advantages, Here people can lend and borrow crypto and earn interest over them.

If we talk about DeFi, we have it's DeFi products and we all can carry their benefits, let's try to understand how these DeFi products are developed, we all aware of it's offering and over these DeFi how our assets can be invested to generate profit or power the blockchain, For example we have a DeFi DEX called sushiswap, where we can exchange our cryptocurrency/tokens without the need of any third party or any broker, they are transparent and secure.

^{Example of a DeFi product called SushiSwap}

^{Swap of Sushiswap}

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b) Explain the benefits of DeFi products to crypto users.

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Let's discuss about the various benefits that DeFi products offer to a crypto user:

• Permissionless
  As the name states that DeFi (Decentralized finance) that it is Decentralized and doesn't require any third party/Intermediates to do a transaction.
  We are not dependent over a central authority that give permission to use the services of DeFi as it has to be done in the centralized system (banks).

• Transparency Decentralized services also comes with transparency, if you have seen a order book of any exchange we can see all the transactions happening at that time and this order book data is available publicly.

• Security
  Decentralized technologies use the cryptography to send data securely, and only that person can access the funds who have the private key.

• Control
  We don't need a third party to manage our funds, we can directly use DeFi servies and have full control over them.

• Lesser Fees
  The speed of transactions is increased as there is no third party or broker due to this we are not required to play any brokerage fees.

• World wide operation
  We can use DeFi services from anywhere in the world and easily manage our funds from anywhere all we require is a internet connection.

• Immutability
  The transaction records are key in the blocks of a blockchain, and these blocks once recorded then cannot be altered or modified.

QUESTION 2:

ANSWER 2:

I use the site called DApps Radar to find the mentioned below DEX built over the Binance Smart Chain and Tron Blockchain.

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DEX built over Binance Smart Chain : BabySwap

^{BabySwap Information over CoinMarketCap}

BabySwap is a DEX that is build over the Binance Dmart chain that's why we can use our BEP20 tokens, It is said to be the best AMM(Automated Market Makers)+NFT(Non-fungible token) Decentralized exchange, all this is done using the AMM model, Here it's not required to match your order from the order book.

Let's explore the BabySwap website.

Native CryptoAsset

BABY is the native token that powers the DeFi BabySwap ecosystem.
Earn BABY from Trade Mining, Yield Farms, and Snack Pools, buy it on the exchange, then explore its use cases:

• Stake BABY in Pools to earn tokens.
• Use BABY in Yield Farms to earn more BABY token.

^{BABY token information over CoinMarketCap}

HomePage of BabySwap

Trade page of Baby Swap

• Swap: Here we can exchange our crypto asset instantly to another crypto asset.
• Liquidity: Here we can add liquidity, we are given with pool tokens which tell our position, these pool token automatically earn fees in proportion to our share in the pool, they can we redeemed at any time.

Farm page of BabySwap

When we add liquidity to the LP(liquidity pools), in exchange to it we get some LP tokens and we earn transaction fees as reward because we are holding it's shares and privided liquidity in making AMM.

Pools page of BbaySwap.

The stacking of baby token in pools gives us reward in form of baby, there is a option for getting other BEP20 token as reward. It is similar to farming. Here our assets get locked for a period of time. Here the risk level is low.

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DEX built over Tron Blockchain : JustSwap

^{JustSwap Information over CoinMarketCap}

Justswap is a Decentralized finance application that is developed to bring digital finance over tron blockchain, It supports many TRC20 tokens, It offers many features, As it is a Decentralized app it doesn't require the presence of any middle man.

All the transactions, trading, and Swapping are done independently. Here we can exchange all the tokens that are attached with Tron network TRC-20. We can swap our token with another token. Let's discuss the features offers by Just Swap.

HomePage of JustSwap

Swap

Here we can swap our crypto assets that are TRC20 tokens, so we can exchange our one type of TRC20 token to another TRC20 token without the help of any broker or third party. Whenever we swap our token some fees is charged, this fees will be further send to the Liquidity providers.

Liquidity

Here we get benefit from the liquidity pool. In this function, we add our assets to the pool and earn profit from it. Our profit is based on the number of tokens that we added in the liquidity pool. We add liquidity of coin. When someone swaps their asset with another asset they pay fee. Then this fee is distributed according to the percentage of assets invested. In this way, this is a great feature of this platform.

Mining LP Token.

Here we earn profit by stacking our assets. On the basis of stacking assets, we get LP Tokens. We get the LP token after adding the Liquidity in the liquidity pool.

QUESTION 3:

ANSWER 3:

Now let's swap currencies over BabySwap platform.

I have connected my Binance smart chain wallet to the Baby Swap website.

• Step 1: Select the assets you want to exchange, here I'm exchanging my BNB to USDT, after selecting the assets enter the amount of token you want to convert or you can just click the Max button to select all of your BNB tokens.

• Step 2: Now we need to confirm the amount and confirm the swapping process by clicking the confirm swap button.

• Step 3: Now sign the transaction from your Binance smart chain wallet by clicking confirm.

• Step 4: Now we need to wait for our transaction to get complete.

• Step 5: As soon as our transaction is completed we can see our transaction details over the BscScan.

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Now let's swap currencies over JustSwap platform.

I have connected my TRONLINK wallet to the JustSwap website.

• Step 1: Select the token you want to swap, Here I chose to swap TRX with USDT, Now enter the amount of TRX you want to swap, Now click SWAP.

• Step 2: Now confirm the swapping process by clicking the confirm swap button.

• Step 3: Now sign the transaction from your TRONLINK wallet.

• Step 4: Now wait for the transaction to complete.

• Step 5: Let's check our transaction details over tronscan.

The DeFi ecosystem and it's product are providing new facilities to crypto users that they aren't accessible to them before, this ecosystem is permission less, borderless, centeral authority are not involved, By using DeFi products we can earn crypto assets and unlock a new way of earning, We can use liquidity pools to provide liquidity and earn LP tokens, one can stake their assets in the liquidity pools, We can swap our tokens with other tokens which are of same blockchain quickly without the need of matching our order in the order book because of AMM, DeFi offers various new ways to earn as it has many Benefits in the similar way there's also a risk in investment here.

I explored two DeFi products called BabySwap and Justswap which are built over two different network that are Binance smart chain and other one over tron blockchain and after exploring we swap our assets over both the DeFi platforms.