Ads ad-300x250
  • Latest
  • Trending
What is DeFi ?

What is DeFi ?

November 7, 2021
How do Web3 and NFTs enrich the live music experience?

How do Web3 and NFTs enrich the live music experience?

January 23, 2023
Paxos offers $1.5 billion deal to MakerDAO for DAI collateralization

Paxos offers $1.5 billion deal to MakerDAO for DAI collateralization

January 23, 2023
SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

December 30, 2022
The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

December 22, 2022
What is flipping in crypto?

What is flipping in crypto?

December 18, 2022
BlackRock predicts an unprecedented recession in 2023

BlackRock predicts an unprecedented recession in 2023

December 10, 2022
Waltio outlines strategy to reduce its taxation on cryptocurrencies

Waltio outlines strategy to reduce its taxation on cryptocurrencies

December 1, 2022
BlockFi files for bankruptcy after FTX collapse

BlockFi files for bankruptcy after FTX collapse

November 29, 2022
Solana’s Phantom wallet opens to Ethereum and Polygon

Solana’s Phantom wallet opens to Ethereum and Polygon

November 29, 2022
Vladimir Putin predicts a blockchain-based international payment system

Vladimir Putin predicts a blockchain-based international payment system

November 28, 2022
The Shiba Inu (SHIB) soon at the World Economic Forum?

The Shiba Inu (SHIB) soon at the World Economic Forum?

November 26, 2022
Cloud mining fraud: founders of $575 million scam arrested

Cloud mining fraud: founders of $575 million scam arrested

November 23, 2022
CoinsMag
SignIn / SignUp
  • HOME
  • NEWS
    SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

    SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

    The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

    The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

    Waltio outlines strategy to reduce its taxation on cryptocurrencies

    Waltio outlines strategy to reduce its taxation on cryptocurrencies

    BlockFi files for bankruptcy after FTX collapse

    BlockFi files for bankruptcy after FTX collapse

    Solana’s Phantom wallet opens to Ethereum and Polygon

    Solana’s Phantom wallet opens to Ethereum and Polygon

    Vladimir Putin predicts a blockchain-based international payment system

    Vladimir Putin predicts a blockchain-based international payment system

  • BLOCKCHAINS
    • All
    • Algorand
    • Avalanche
    • Bitcoin
    • BNB Chain
    • Cardano
    • Cosmos
    • Dogecoin
    • Elrond
    • Ethereum
    • Monero
    • Polkadot
    • Polygon
    • Ripple
    • Shiba Inu
    • Solana
    • Stellar
    • Ternoa
    • Terra
    • Tezos
    • Tron
    How do Web3 and NFTs enrich the live music experience?

    How do Web3 and NFTs enrich the live music experience?

    SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

    SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

    The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

    The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

    What is flipping in crypto?

    What is flipping in crypto?

    Waltio outlines strategy to reduce its taxation on cryptocurrencies

    Waltio outlines strategy to reduce its taxation on cryptocurrencies

  • DEFI
    Paxos offers $1.5 billion deal to MakerDAO for DAI collateralization

    Paxos offers $1.5 billion deal to MakerDAO for DAI collateralization

    BlackRock predicts an unprecedented recession in 2023

    BlackRock predicts an unprecedented recession in 2023

    Free crypto / referral codes

    This (other) billionaire, who prefers Dogecoin to Bitcoin

    This (other) billionaire, who prefers Dogecoin to Bitcoin

    Google and the king of crypto oracles Chainlink (LINK) unveil their joint project

    Google and the king of crypto oracles Chainlink (LINK) unveil their joint project

    The Bitcoin (BTC) hashrate is on the rise again

    The Bitcoin (BTC) hashrate is on the rise again

    Burger King accepts Dogecoin (DOGE) in Brazil… for dog food

    Burger King accepts Dogecoin (DOGE) in Brazil… for dog food

    791 bitcoins bought for $5 9 years ago have finally come to life

    791 bitcoins bought for $5 9 years ago have finally come to life

    Binance: the rise of the BUSD impresses

    Binance: the rise of the BUSD impresses

  • NFT
    How do Web3 and NFTs enrich the live music experience?

    How do Web3 and NFTs enrich the live music experience?

    Is Apple planning to release a movie about Sam Bankman-Fried and the FTX case?

    Is Apple planning to release a movie about Sam Bankman-Fried and the FTX case?

    In the United States, a house in NFT has just been sold for $175,000

    In the United States, a house in NFT has just been sold for $175,000

    CNN is accused of rug pull by the community after its NFT project was stopped

    CNN is accused of rug pull by the community after its NFT project was stopped

    The OpenSea marketplace lands on Avalanche (AVAX)

    The OpenSea marketplace lands on Avalanche (AVAX)

    Japan sees the future in nft and metaverse

    Japan sees the future in nft and metaverse

  • GAMES
    Square Enix partners with Oasys to develop blockchain games

    Square Enix partners with Oasys to develop blockchain games

    Epic Games gets a head start on its Steam competitor

    Epic Games gets a head start on its Steam competitor

    Do you have to be a bot to enjoy web 3 (bad) games?

    Do you have to be a bot to enjoy web 3 (bad) games?

    StepN partners with Atletico and WhaleFin for a collection of exclusive NFTs

    StepN partners with Atletico and WhaleFin for a collection of exclusive NFTs

    Crypto Gaming, an industry revolution this year?

    Crypto Gaming, an industry revolution this year?

  • METAVERSE
    Solana’s Phantom wallet opens to Ethereum and Polygon

    Solana’s Phantom wallet opens to Ethereum and Polygon

    Is Apple planning to release a movie about Sam Bankman-Fried and the FTX case?

    Is Apple planning to release a movie about Sam Bankman-Fried and the FTX case?

    World Cup in Qatar: FIFA plunges into the mawkishness

    World Cup in Qatar: FIFA plunges into the mawkishness

    The United Arab Emirates: a first “meta-nation”?

    The United Arab Emirates: a first “meta-nation”?

    At Meta, employees are forced to log into the Horizon Worlds metaverse

    At Meta, employees are forced to log into the Horizon Worlds metaverse

    No, Decentraland does not have only 38 daily active users

    No, Decentraland does not have only 38 daily active users

    Japan sees the future in nft and metaverse

    Japan sees the future in nft and metaverse

    Yuga Labs unveils its new community board in charge of the project’s evolution

    Yuga Labs unveils its new community board in charge of the project’s evolution

  • FREE CRYPTOS
  • TUTORIALS
    Buy a Ledger wallet on Amazon – Is it really secure?

    Buy a Ledger wallet on Amazon – Is it really secure?

    Odysee | EARN Lbry Credits (LBC) watching videos

    Odysee | EARN Lbry Credits (LBC) watching videos

    Web 3.0: better infrastructure needed to stop centralization

    Web 3.0: better infrastructure needed to stop centralization

    Avoiding NFTs scams: how to spot scams

    Avoiding NFTs scams: how to spot scams

    Is buying real estate in the metaverse a wise investment?

    Is buying real estate in the metaverse a wise investment?

    FOMO, the crypto investor’s worst enemy – 10 Rules to fight it

    FOMO, the crypto investor’s worst enemy – 10 Rules to fight it

No Result
View All Result
CoinsMag
No Result
View All Result

What is DeFi ?

November 7, 2021
in News, TUTORIALS
What is DeFi ?

Decentralized finance (DeFi) continues to soar since the start of “DeFi Summer” in 2020. However, for those just learning about this sector, even the basic concept of tokens can seem complicated.

Presentation

Previously, most new entrants to the crypto sector arrived via Bitcoin. Now, with the growth of NFTs and crypto memes, people’s immersion in the sector is through other channels.

Sure, the boom that DeFi has experienced has helped with crypto adoption, but it hasn’t exactly made things simpler. Indeed, a person taking their first steps into crypto may grasp the idea of buying a piece of art or holding a Shiba Inu coin, but they may not immediately understand the real purpose of these tokens.

Far more than just hyper-mediated crypto-currencies, DeFi tokens are an important source of value creation. Their holders can use them for their investments, to participate in the governance of protocols, and even as collateral for loans. Indeed, these tokens are created by projects to achieve specific goals.

Deciphering how DeFi tokens are used

First of all, you should know that decentralized finance tokens are different from other cryptocurrencies. For example, Bitcoin, which has been around for years, has only recently begun to build its ecosystem. On the other hand, DeFi, which is much newer than Bitcoin, is already used every day in financial services.

Indeed, DeFi tokens are not a simple means of exchanging goods and services, and this is where their complexity comes from.

Governance in decentralized finance

Since the goal of decentralized finance is to offer an alternative to traditional financial systems, rules must be established. These rules will allow DeFi projects to make important decisions about protocol changes.

For this reason, governance relies on a set of rules and operations to regulate all network actions.

The guarantees

The advantage of DeFi is that financial assets are accessible without the need for intermediaries or paperwork. This allows token holders to obtain collateral-backed loans, as they themselves contribute to the liquidity of the platform.

Investment

Speculative investment is another option offered by tokens. Indeed, people buy and hold tokens because they expect them to gain in value. However, as with all other cryptocurrencies, there are risks associated with this asset holding. From volatility to security breaches, DeFi protocols are not immune to vulnerabilities.

Staking cryptocurrencies

In practical terms, staking involves “locking up” a portion of one’s cryptocurrency holdings for a set period of time. It is a way to contribute to the blockchain network.

Holders of staked tokens receive rewards, often in the form of additional tokens. In a nutshell, crypto staking is quite similar to depositing money in a bank. The mechanism is simple: the depositor “locks” his funds and receives rewards in return.

The most popular DeFi tokens

Currently, there are 214 DeFi tokens to choose from, each with its own characteristics. Here are some of the most popular platforms and their tokens.

AAVE: 16,000,000 AAVE

Aave is one of the most popular DeFi platforms right now and its native token is LEND. This liquidity protocol allows users to earn interest on their deposits or borrow assets. In addition, they can benefit from reduced fees and have the opportunity to later participate in the governance of the protocol.

Indeed, users can engage either as borrowers or depositors. The platform deposits users’ funds into a non-depository smart contract housed on the Ethereum blockchain (ETH).

yEarn: 30,000 YFI

The yEarn protocol acts as an automated yield aggregator governed by the native token, YFI. It offers various yield farming opportunities. To participate in governance, holders must place their YFI tokens in staking. This will allow them to claim a pro-rata share of the platform fees.

Ren Protocol: 1,000,000,000 REN

The Ren Protocol transfers assets to Ethereum using the RenVM network. It also provides a decentralized, permissionless virtual machine. In order to host a dark node on the protocol, users must offer 100,000 REN as collateral. After giving this guarantee, users begin to receive a pro rata share of the platform’s trading fees. Ren allows tokens to be wrapped in ERC-20, which makes it easier for DeFi platforms to support them.

Uniswap: 1,000,000,000 UNI

Uniswap is the leader in decentralized DeFi exchanges. Its native token UNI is based on the Ethereum blockchain. In the beginning, users were given UNI tokens for participating in the exchange. Today, those with a significant number of tokens can vote on the various policies offered on the Uniswap platform. UNI has a market capitalization of over $18 billion, making it one of the most valuable DeFi tokens.

Not all DeFi tokens are created equal

As with any other profitable sector, DeFi is not immune to scams and problems.

“The majority of DeFi tokens are worthless. Most are not tied to the cash flow generated by the project, and the ‘value’ they offer often pays you with more worthless tokens,” says Red, community manager at Harvest Finance.

“It’s important to watch what happens to these projects after their initial wave of hype. Those looking for cash rush to the rewards and then move on, leaving behind overvalued tokens and a project with zero viability,” he continued.

However, this isn’t a problem specific to DeFi. Red compared the situation to the current hype surrounding NFTs.

“There may be value in a small percentage of NFTs, but most of the NFTs we see now are just variations of “pet photos” with no utility, and people are hoping to cash in on the hype surrounding them,” he pointed out.

So those new to the DeFi industry really need to consider the full range of projects they are interested in. Most legitimate projects, which have real value tokens, also have well-built communities around them.

It is through these decentralized communities that one can assess the value of a DeFi project and its token. A strong community proves that there is a human commitment to the project, not just a hype around a token.

ShareTweetPinSendShareSend
Previous Post

How Bitcoin is changing the Australian banking landscape

Next Post

3 radical ways to destroy Ethereum 2.0

Related Posts

SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?
News

SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

December 30, 2022
2.5k
The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000
Bitcoin

The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

December 22, 2022
2.3k
Waltio outlines strategy to reduce its taxation on cryptocurrencies
Blockchains

Waltio outlines strategy to reduce its taxation on cryptocurrencies

December 1, 2022
2.5k

Popular news

  • How do Web3 and NFTs enrich the live music experience?

    How do Web3 and NFTs enrich the live music experience?

    0 shares
    Share 0 Tweet 0
  • Free crypto / referral codes

    0 shares
    Share 0 Tweet 0
  • Paxos offers $1.5 billion deal to MakerDAO for DAI collateralization

    0 shares
    Share 0 Tweet 0
  • SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

    0 shares
    Share 0 Tweet 0
  • The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

    0 shares
    Share 0 Tweet 0

Categories

  • Privacy Policy

© 2022 - CoinsMag

No Result
View All Result
  • HOME
  • NEWS
  • BLOCKCHAINS
  • DEFI
  • NFT
  • GAMES
  • METAVERSE
  • FREE CRYPTOS
  • TUTORIALS

© 2022 - CoinsMag

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
Ads Blocker Image Powered by Code Help Pro

Ads Blocker Detected!!!

We have detected that you are using extensions to block ads. Please support us by disabling these ads blocker.