DeFi
Decentralized Finance ( #DeFi ) is an ecosystem that provides financial services without the need for traditional financial intermediaries, using crypto assets such as smart contracts and blockchain technology in place of a central authority. The main goal of DeFi is to increase financial inclusion by making financial processes more open, accessible and transparent.
Decentralized:
DeFi works without traditional banks or financial intermediaries. This means users can directly control their assets and conduct financial transactions.
Smart Contracts:
#DeFi projects often use smart contracts built on blockchain platforms such as Ethereum. Smart contracts are snippets of code that run automatically when certain conditions are met.
Tokenization:
DeFi projects provide access to a wider range of financial assets through the ability to convert assets (e.g. money, commodities, real estate) into digital tokens.
Liquid Asset Pools:
DeFi includes protocols that enable users to obtain loans and earn returns by participating in liquid asset pools.
Credit Protocols:
Credit protocols in DeFi allow users to obtain loans using crypto assets as collateral. This provides an alternative financial service to traditional credit systems.
Exchange Protocols:
DeFi includes projects built on decentralized exchange protocols. These protocols allow users to exchange crypto assets.
Financial Inclusion and Global Access:
DeFi has the potential to increase participation in financial services for millions of people around the world without limiting their access to the traditional financial system.
Risks and Challenges:
The fact that DeFi is a rapidly developing field involves some security and regulatory challenges that have not yet been resolved. It is important for users to be careful and understand the risks.
DeFi has the potential to revolutionize the financial industry, but it also poses new and complex problems. Therefore, it is important to research carefully before participating in DeFi projects.
The ecosystem of Decentralized Finance (DeFi) is vast, consisting of a number of different protocols, applications and services.
Blockchain and Smart Contracts:
The DeFi ecosystem is generally built on blockchain platforms such as Ethereum. These blockchains allow smart contracts to run. Smart contracts are used to automate and securely execute financial transactions by coding them.
Exchange Protocols:
Decentralized exchange (DEX) protocols are a key component of the DeFi ecosystem. These protocols allow users to exchange crypto assets. Examples include Uniswap, SushiSwap and Balancer.
Credit Protocols:
DeFi includes lending protocols where users can obtain loans using crypto assets as collateral. For example, platforms such as Compound and Aave provide liquidity to users, allowing them to obtain loans.
Asset Management Protocols:
The DeFi ecosystem includes protocols for asset management. These protocols allow users to manage their assets according to a specific strategy and earn returns. Protocols such as Yearn Finance and Curve Finance are examples of this category.
Liquid Asset Pools (Liquidity Pools):
Liquid asset pools, one of the basic building blocks of DeFi, allow users to provide liquidity by adding their crypto assets to a pool and obtain loans using this liquidity. Uniswap and Balancer are examples of platforms that provide liquid asset pools.
Orak (Oracle) Services:
DeFi applications often need external data. Orak services are used to access this data. Sickles bring real-world data to the blockchain, allowing smart contracts to consume that data.
Insurance Protocols:
Insurance protocols exist to mitigate risks within the DeFi ecosystem. These protocols allow users to insure their assets and minimize potential losses.
Portfolio Management and Investment Platforms:
DeFi includes platforms that offer users a variety of options for asset management and investing. These platforms focus on optimizing portfolios and generating returns.
These components represent the main elements that make up the overall structure of the DeFi ecosystem. However, as DeFi is a rapidly developing field, this structure is constantly evolving with the addition of new protocols and applications.
Exchange protocols (Uniswap, SushiSwap)
#Uniswap
1. Basic Principles and Working Mechanism:
Uniswap is an Ethereum-based decentralized exchange protocol. It works based on liquid asset pools. Users can trade by adding their tokens to a specific pool of liquid assets and providing liquidity to the tokens in this pool.
2. AMM (Automated Market Maker) Model:
Uniswap trades using the AMM model. In this model, prices are automatically adjusted according to the balance of supply and demand in liquidity pools. Transactions occur directly from one token to another as users provide liquidity to pools of liquid assets.
3. Token Swap Transactions:
Users can exchange their tokens via Uniswap. Prices vary depending on the amount of tokens in liquidity pools. Uniswap maintains liquidity pools by providing incentives to its users to ensure constant liquidity.
4. #DEX and Transparency:
Since Uniswap is a decentralized exchange, users can trade and control their funds through their own wallets. Additionally, all transactions are recorded transparently on the Ethereum blockchain.
5. UNI Token:
Uniswap has created its own governance token called UNI to reward users who want to contribute to the governance of its platform.
#SushiSwap
1. AMM Model and Forking:
SushiSwap is a protocol originally developed using Uniswap's code base. However, he later added and developed his own unique features. In this respect, SushiSwap is a fork of Uniswap.
2. Staking and Belohnungs:
SushiSwap offers its users the opportunity to earn rewards by providing liquidity to liquid asset pools and staking SUSHI tokens. This is a strategy to attract users to the platform and increase liquidity.
3. AMM Optimizations:
SushiSwap has implemented optimizations in the AMM model. For example, users can contribute to the platform by staking their own tokens and receiving SUSHI tokens as rewards.
4. SUSHI Token and Governance:
SushiSwap provides participation to its users with its own governance token, SUSHI. SUSHI holders can participate in the administration of the protocol and suggest changes.
5. Customizability and Innovation:
SushiSwap builds on Uniswap and adds customizations and innovations, providing an enhanced user experience. This gives users more options and flexibility.
Both protocols represent the fundamental principles of decentralized finance and allow users to exchange assets independently of traditional exchanges. However, both protocols have their own unique features and strategies.
