Introduction to DeFi

Decentralized finance, also referred to as “DeFi” or open finance, aims to recreate traditional financial systems (such as lending, borrowing, derivatives, and exchange) with automation in place of middlemen. Once fully automated, the financial building blocks of DeFi can be composed to produce more complex capabilities.

Working of DeFi

DeFi works through DApps and smart contracts; they are decentralized applications built on the Ethereum or other public networks. These create, store, and manage digital assets. They are popular in borrowing and lending platforms and decentralized exchanges (DEX).

Binance Smart Chain is a blockchain that runs parallel to Binance Chain, the original Binance blockchain.

BSC is different from Binance Chain because it supports smart contracts, decentralized applications (DApps) and is compatible with Ethereum Virtual Machine (EVM). DApp support means that people can launch decentralized finance (DeFi) projects on BSC. Also, BSC is cross-chain compatible, allowing users to transfer assets between Binance Chain and Binance Smart Chain.

Top Binance Smart Chain DApps

BSC is becoming a popular Ethereum alternative for launching DeFi protocols and deploying decentralized applications. Below is a list of the top five DApps on BSC based on dollar amounts locked in the smart contracts, according to data provided by DApp Radar.

PancakeSwap is an automated market maker (AMM) built on BSC that allows users to trade digital assets that run on BSC. Additionally, PancakeSwap allows DeFi investors to yield farm and stake crypto assets to (potentially) earn high APYs on their virtual asset holdings.

At this point, you can start to use the platform to swap Binance Smart Chain (BEP20) assets, provide liquidity to trading pools to earn trading fee revenues, and stake liquidity provider tokens to earn yield farming rewards.

You can also play the lottery on PancakeSwap to win rewards and register to win a special NFT. The platform has an Initial Farm Offering (IFO) page where users can access new tokens that have been launched.

Venus is a DeFi lending platform on BSC that enables users to borrow against collateral without having to pass a credit check. Conversely, lenders can deposit funds into a lending pool to receive an above-average variable APY on their digital assets.

Autofarm Network is a DeFi platform that provides a DEX and yield aggregator. The platform offers vaults that “automate the best yield farming opportunities.” Vaults execute automated actions, like using assets as liquidity and collateral, and compound yields automatically.

BakerySwap is a decentralized automated market-making (AMM) protocol that is based on the Binance Smart Chain (BSC). The BAKE token is a native BEP-20 governance token on the platform. … The BAKE rewards are offered in several liquidity pools, initially including BTC, ETH, DOT, LINK, BUSD and BAKE versus BNB.

In this beginner’s guide to decentralized finance (“DeFi”) we review the following:

Stablecoins.

A building block of decentralized finance. Unlike cryptocurrencies like Bitcoin or Ethereum that are known for their price volatility, a stablecoin is engineered to remain “stable” at exactly 1.00 units of fiat. Most stablecoins are pegged to the USD, but some are in other fiat currencies like the Chinese RMB.

Decentralized lending.

Programmatically take out a loan on the blockchain. No bank account required.

Decentralized exchanges.

Buy and sell cryptocurrencies through a blockchain, rather than a centralized exchange like Coinbase. In principle, a machine can trade on these!

Collateralization.

Provide digital assets to collateralize your decentralized loans, providing the lender some recourse in the event of default.

Decentralized Identity.

Identities are used in the context of smart contracts for things like assessing your creditworthiness for a decentralized loan.

Composability.

Snapping together DeFi functions that do different things, much like software libraries. For example, if one contract takes in crypto and generates interest, the second contract could automatically reinvest that interest.

Risk management.

High returns in DeFi are often accompanied by even higher risks. Fortunately, new tools are arising to help hedge these risks.

Click the link below to get your Binance account which is free of charge.

To buy Cryptocurrency in Binance you can click the link below.

P2P Buy/Sell https://p2p.binance.com/en?ref=36687617

Twitter
https://twitter.com/BinanceAfrica

Instagram
https://www.instagram.com/binanceafrica

Telegram

Nigerian Telegram community (https://t.me/binancenigeria)

Thank You!

#Binanceafrica
#Binance