Now, all portal platforms related to cryptocurrency, blockchain and digital assets are inseparable from these topics every day: DeFi, "Yield-farming", "YAM" and "yearn". For people in coin circles and chain circles, of course, it is not strange at all; But for outsiders, especially those in the fields of finance and IT, if you are still unfamiliar, you don't even need to know, then you are already in the backward queue of digital innovation in China!

complete answer source: /profile_v4/graphic/preview? Pgc_id=686954325153476 I. What is DeFi?

DeFi stands for "decentralized finance" and aims to rebuild the traditional financial system with fewer and better intermediaries. Many traditional behaviors in the market, such as loans, borrowing, structured derivatives and securities trading; Now it can be done through decentralized open source networks.

At present, most of these applications (or "Dapps") are created on the Ethereum. In fact, in principle, other public chain networks with intelligent contract function can also complete these decentralized financial transactions. 2. What are some common functions of DeFi?

first of all, DEFI is inseparable from the stable currency. Unlike ordinary cryptocurrencies such as Bitcoin, which is highly volatile, stable currencies are linked to legal national currencies such as the US dollar. It is impractical to re-create loan contracts and other financial products in unstable assets, so most DeFi contracts contain stable coins at the core of their functions. Common types of stable coins in today's market include these: USDT, USDC, TrueUSD, Dai and Paxos.

at the time of writing, the total value locked in the DeFi contract is about $8 billion. Introduction of main application products in DeFi:

1. Lending

DeFi allows users to get loans programmatically without having to review the application or even have a bank account. In some DeFi applications, borrowers do not need to go out to find lenders. Instead, the lender is the smart contract itself, and the interest rate is calculated according to the relationship between supply and demand. In other applications, a fixed interest rate is guaranteed in exchange for lending your coins to the contract.

DeFi allows borrowers to use their digital assets as collateral, which are locked in smart contracts until the loan is repaid. Because of the primitive nature of space, the incidental requirements may be very high, which makes it unrealistic.

examples of defi loan platforms include: Compound, Aave and Maker.

a commonly used term: "Yield-farming" is a new function created by Compound on June 15th, in which users get token rewards by participating in the general certificate economy and providing liquidity for the agreement. This trend was later accepted by other DeFi protocols.

2. Decentralized exchanges

Trading of securities and cryptocurrencies is usually conducted through platforms operated by third parties. But what if a machine can seamlessly create a fair deal through smart contracts? The exchange innovated by DeFi eliminates middlemen and can act as the custodian of funds and digital assets in peer-to-peer exchanges.

examples of decentralized exchanges include Curve, Uniswap, Bancor, Kyber and Synthetix.

It is worth noting that in the past few days, Uniswap's daily trading volume has surpassed Coinbase, one of the most popular crypto exchanges in the United States, with more than 1,2 employees. For Uniswap, this is not a small historical feat. It is basically automated and does not need a centralized team to operate.

3. Asset management agreement

A recent class of DeFi products has created a framework for users to concentrate funds on investments similar to robot consultants, automatic funds and asset aggregators.

examples include: year.finance, melon, set protocol, zapper.fi and Insta.dapp

4. Decentralized market forecasting, options and insurance

For speculative events, what is happening or not has been realized in these realizable aspects: decentralized market forecasting, online elections and insurance claims, which has become a completely automated problem. Nowadays, these platforms are often used to ensure loopholes in smart contracts. In the future, these platforms will be used to prevent accidents and natural disasters.

for example: Augur, Polymarket, Opyn and Nexus Mutual.

5. Synthetic Asset Hub

This is a very popular one! Assets like bitcoin may be useful for some functions (such as stored value), but it is difficult to use as collateral. Think of it as gold stuck in the vault, which is difficult to move, fix and mortgage. Creating a digital representation or bitcoin usage right can be used for financial contracts. These platforms have become so popular that bitcoin is currently tokenized faster than mining.

curRENtly, the platforms serving as synthesis hubs include: BitGo ($386 million in token BTC) and ren ($2 million in token BTC), and Keep Network will be launched soon.

finally, DeFi also promised to easily combine different smart contracts. For example, you can invest $1, with 5% interest, and then automatically reinvest the interest in another asset through DeFi Robot Consultant, or use it as collateral for a loan. 3. Who is investing in DeFi?

In addition to gamers and fanatical "yield farming" till late at night, some funds are making institutional investments in DeFi. Some famous investors in this field include: DG Lab Fund, ParaFi Capital, Framework Ventures, 3Arrows, Mechanism, Coinfund, and senior encryption investors Polychain, Pantera and Multicin Capital.

Ben Forman, managing partner of ParaFi Capital, said in a talk why he invested his own fund in DeFi:

"It is not surprising that many people think that DeFi is the latest fashion of encryption technology. The next big thing often starts to look like a toy. DeFi protocol provides a way to build financial products on a global scale. You have seen the sandbox of innovation, which is infinite in terms of participation and capital flow. For any new technology, you will see a lot of experiments and failures. Failure is the price of innovation. But it's important not to throw the children away with the bath water-the underlying architecture behind the ——DeFi network has lasting power. These use cases are eroding the legacy financial infrastructure, so that they are increasingly difficult to ignore. " Fourth, investors should be careful

The author believes that although some investors seem to multiply their funds overnight, DeFi reminds us of the ICO boom in 217-218. Higher returns mean higher risks. Many of these projects are still speculative, accompanied by smart contracts, mortgages and unpredictable risks of volatility. As always, do your own research.

the original source of the answer: /profile_v4/graphic/preview? Pgc_id=686954325153476

It is a model that once had a unified management, and all * * * will be managed together again. Decentralization looks good. However, it is very difficult to achieve. A little bit is that it is not easy to tamper with the data after decentralization.