Crypto Academy Week 4 Homework Post for [@yohan2on] Briefly explain each of the following DeFi apps [ Maker Compound Synthetix bZx Uniswap]

Maker is a smart contract cryptocurrency built on the ethereum platform with a stable coin pegged at US Dollar

Maker coin is part of the system that creates one of the most stable coins called DAI which is locked at $1. DAI is ordered on a regular basis because unlike tether and other stable coins. Even publish.io uses DAI as a reward for publishers on their platform. The interesting part is that DAI cannot exist without Maker, because they complement each other. Real cryptocurrencies having good value are staked as collateral for DAI but when these cryptocurrencies loses value, it would affect the stability of DAI, so that's where the maker comes in. The maker is used to pay the debt for DAI to regain stability. If the coins used for collateral crash, the maker coin value also goes down because it has been issued to stabilize the DAI i.e (making up for the difference), which makes it more in circulation. However, if the collateral coins retain their value or go up, Maker also increases in value. All this is to make sure the DAI stays pegged with the US Dollar

Maker offers a smart contract platform on the ethereum blockchain which is called CDP (Collateral debt position). Users can deposit an asset as collateral for a loan for margin trading and once the CDP receives the asset, the equivalence of the asset would be generated in USD value in DAI which the user can use to trade or do anything he wishes to use it for. The assets that Maker DAO takes as collateral for giving out DAI are Ether, BAT, WBTC, and stable coins on USDC

As at 2017, Maker was only $600, but now more than $2000. The screenshot from coinmarketcap shows the proof below.

Compound

Compound is an open-source project built on the ethereum blockchain creating a money market. These money market are assets deposited by individuals and it is algorithmically by the system. Compound came to eliminate the peer to peer borrowing and lending of asset. For instance, Margin deals with peer to peer lending of asset, but in the case of compound, users interact directly with the protocol without having to negotiate terms like collateral, interest rate, or maturity with anyone

What is the use case of Compound

As far as I know, compound doesn't have much use case, but the few it has comes with a heavy importance. Compound is made to allow holders of Ether, Argur, and other valuable ERC20 token to supply their tokens to the protocol and reap profit without the fear of losing their funds. If someone with 20 Ether holds his or her coin in the wallet, the only advantage it could have is when the coin rises. And if it depreciates, that's a disadvantage. The compound protocol has made it possible for holders to hold their assets on the compound protocol and generate more income. Even if the asset in question depreciates in value, the interest generated would cover it. So in this wise, it's always a win case

Also, the compound protocol allow users to borrow asset. What user needs to do is to specify the asset to be borrowed and cToken is used as collateral. cToken on compound means user's balance. It is this balance that would determine the amount of asset to be borrowed. Every thing on the compound protocol is set algorithmically, so if the any transaction carried out by a user conforms with the programmed system, the transaction would incline.

Image. My design

Synthetix

Synthetix is a decentralized DEFI finance protocol built on the ethereum blockchain that allows us to trade and issue real-world assets using smart contracts. There are many real-world assets that cannot be traded on ethereum, but synthetix made it possible for these assets to have a place on the platform. Gold, US dollars, some cryptos that are not created on the ethereum blockchain. If gold, US Dollar, and other cryptos are not made on the ethereum blockchain, it's not possible to trade them on it. But with Synthetix, all these assets can be traded on the ethereum blockchain using what is called synth, so all these assets are classified as synthetic assets

Also, they are represented on the ethereum blockchain as ERC20 tokens, so for example, Gold is called SGOLD on the synthetic protocol to represent the real world gold, and that makes it a synthgold (an ERC20 token). The synth tracks the price of the real-world asset and showcases it on the ethereum blockchain which can be traded as an ERC20 token.

There are some types of synths***

The first is the fiat.

All local currencies are fiat but specifically, there some that are traded on the ethereum blockchain

SUSD SKRW SUER. Note that the S stands for synth and all these fiats are ERC20 on the ethereum blockchain-powered by sythetix (Synth).

There are commodities too like Gold
Cryptocurrencies like SVGC, SETH, SBNB are also parts of the cryptocurrencies traded on synthetics.
IBTH, IBNB, and IBTC
Crypto indexes, and so on.

There is a particular amount of SNX to be locked to generate the synthetic asset that would be used on the ethereum platform. The amount of SNX I put in for example determines the amount of SGOLD, SUSD -etc, I would get, but there is a collateralization ratio, and if the ratio is not met, the transaction won't be successful.

Every SNX holders have a benefit. There is what is called a dead pool or trading fee. Every transaction that happens on the SNX platform goes with charges and these charges are distributed among all SNX holders who hold SNX as collateral to the synthetix platform. Also, the regular staking reward goes on.

One of the disadvantages of Synthetics is that SNX can fluctuate due to the change rate for different assets, You will deposit more SNX to get more Synthetic assets to retrieve your complete SNX back. There is always a disadvantage to everything. However, the good part outweighs the other.

Screenshot (48).png

As of today, SNX is above $21.

bZx

bZx is a decentralized platform built on the ethereum blockchain for lending, borrowing, and trading founded by Tom Bean and Kyle Kistner in 2017. On the platform, there are two main strata which are the fulcrum and the toque. The fulcrum is for tokenized lending and margin trading. Users can borrow funds for trading and payback according to the platform's settings.

Screenshot (49).png

Users can select wallet providers ranging from metamax, to trust wallet, ledger, trezor, wallet connect, and so on. There is no KYC to use the fulcrum feature on the platform. Also, the toque is meant for borrowing asset which has a fixed interest. For instance, if you want to borrow $100 worth of an asset, the interest might be $5 fixed. (Just an example). Users already know the fixed price of the interest on any asset they want to borrow.

Uniswap

I wrote about uniswap in one of our prof's week 4 Homework. Here is the link https://steemit.com/hive-108451/@ckole/crypto-academy-week-4-homework-post-for-gbenga.

Uniswap is a decentralized dapp that runs on the ethereum blockchain that anyone can interact with. It is designed for sweeping any ERC20 tokens and create liquidity on ethereum blockchain. As a decentralized exchange, Uniswap has made listing of coin easy, unlike the centralized exchanges where millions of dollars are needed. Coins are listed free on uniswap. Also, Uniswap and any other DEXes are difficult to shut down because they operate openly. Even if there is a governmental attack that succeeds in shutting them down, the codes can be forked and another brand will emerge, so the decentralization system of Uniswap makes it unique.

Thanks for this homework @yohan2on. I'm learning more and improving myself in the crypto world. This is coming almost late. but I still made it before the deadline. More power to your elbow.

All images are screenshots from my PC.

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yohan2on (74) · 4 years ago

Hi @ckole

Thanks for attending the 4th-week Crypto course and for your effort in doing the homework task.

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This is excellent work. Well done with the research study on all the highlighted DeFi projects. Keep it up!

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ckole (68) · 4 years ago

Thanks prof. I'm glad for attending your lectures and also for your good work. My week 5 home work will land soon. Thanks prof

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