CRYPTO ACADEMY WEEK 7 HOMEWORK TASK POST FOR @gbenga : Introduction to Defi and Yield Farming

Thanks to @gbenga for the wonderful lecture on Introduction to Defi and Yield Farming

What is DeFi

Decentralized finance is an independent financial environment that enables users to monitor their money fully: without government and bank interference. In the introduction of this industry, Blockchain technologies have played a major role.
Interaction in decentralized ecosystems takes place without intermediaries according to the P2P scheme, that is, market participants independently cope with transactions. It:

1. Saves time;
2. Saves money;
3. Allows you to maintain confidentiality.

Taking a short look at the benefits of decentralized finance, the list would look like this:

1. Simplicity and availability of technology for ordinary people;
2. Scalability and distribution of the registry, as a result - a more secure and resistant to technical errors system;
3. Reduced costs of maintaining the system and lower commissions (or lack thereof).
4. Another plus is versatility. In almost every field of life, DeFi can be used.

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What are the challenges hindering the widespread adoption of DeFi?
What are the issues that affect the quality of the user experience when interacting with decentralized finance. These include: oversupply, relative centralization, low liquidity, and poor interoperability between different blockchains.

• Centralization . The fact is that many DeFi projects are not as decentralized as it is positioned to be. This is especially true for new projects, when developers retain partial control. Officially - to respond faster to changes and more efficiently fix problems. But sometimes this situation persists even at the stage of widespread distribution. Which is quite risky, even if the development team has a good reputation and is trustworthy. The solution to this problem is “progressive decentralization”. This is when at first the developers can really control a lot, but as the project develops and grows, their ability decreases to the point of turning the project into a self-regulating system.

• Oversupply. One of the main problems in lending and borrowing. Since the market does not offer guarantees of stability, lenders want their assets to have higher collateral. That is, they will refuse to work with borrowers who do not prove their ability to work effectively with funds. And this undermines the very idea of ​​lending, making it the prerogative of only the “elite”. And it directly contradicts one of the points of the DeFi philosophy, according to which the system should serve as a "bank" for those with whom traditional banks do not want to work. In addition, it reduces the profit when working with leverage, which makes this trading option less attractive for traders.

• Low liquidity and difficulty in switching between blockchains. Among the huge variety of cryptocurrencies and tokens, it is sometimes extremely difficult to find traders who will not only be ready to exchange one for another, but also have sufficient funds for this. And if you add to this the complexity of transferring some tokens to others, you get an extremely slow system in which you have to wait a long time for your turn to conclude a deal.

Synthetix

Synthetix is ​​one of the most exciting decentralized finance (DeFi) projects currently in the field. Built on the Ethereum Network, this project allows users to issue and trade synthetic decentralized assets. Not just the usual cryptocurrencies mix, but even fiat currencies and even commodities are included.

How does Synthetix work, and is it safe?
Synthetix was developed to build synthetic assets as a DeFi project.
These synthetic assets can track the price of any other asset, be it currencies, stocks, bonds, commodities, or even other cryptocurrencies. If this is something that has real value, then the Synthetix platform will create a synthetic asset to track the price of that asset.
The mechanism behind Synthetix is ​​very similar to that used by stablecoins to maintain their pegged value. But instead of a single stablecoin, Synthetix will allow anyone to mint a synthetic asset backed by the SNX token.

Synthetix was built on the Ethereum blockchain. In contrast to many other blockchain ventures, it contains two separate tokens:

• The main token used to create synthetic assets is called Synthetix and uses the SNX ticker symbol.
• The second type of token is called Synth. These are all synthetic assets created with the Synthetix platform.

Outwardly, the system for using Synthetix is ​​quite simple and straightforward. Users buy SNX tokens first and then block them in a compatible wallet. Once they lock SNX tokens, they can be used to create synthesizers to track the price of some other tangible assets.

Synths are available mainly for currency or cryptocurrency pairs. Gold and silver based synthesizers are also available, and all synthesizers can be bought and traded on the Synthetix exchange.

Synthetix Distinctive features that are rare in other systems.

• Anyone can create and convert Synths without the need for a contractor;
• Any synthesizer can be exchanged for any other synthesizer on the Synthetix exchange, and its functionality provides virtually unlimited liquidity.
• Peer-to-peer (P2C) trading, where trades are executed quickly and easily, all without an order book.
• The distributed pool of token holders is responsible for ensuring the platform and maintaining the stability of the exchange.

To round it all up

DeFi is one of the main driving forces in cryptography right now. The segment has solid support and is evolving at a tremendous rate.

If everything develops at such a pace, the new digital economy with decentralized finance will not be long in coming.

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Special Thanks @gbenga, @steemitblog, @steemcurator01, & @steemcurator02.