WHAT IS DEFI? Cryptocurrency and usage. Decentralized Finance. Free Introduction course. BTC & ETH

hello everybody so right now i'm actually 
back with a new video for you guys   so what is defined in this video we'll 
be delving deeper notify the different   types of defined usage of the file and what's the 
difference between defined and traditional finance   so make sure to subscribe because new contents 
are actually added weekly and let's watch and grow   together now let's get ready and move on so what 
is decentralized finance so the fund is actually   short for decentralized finance an umbrella 
term for a variety of financial applications   in cryptocurrency on or blockchain geared towards 
disrupting financial intermediaries so devise   actually projects and protocols for decentralized 
finance the basis of define a decentralized   opportunity for exchange investment and lending 
freely in practice and absolutely democratic   instructor so with full control of your funds 
which are trusted not to specific individuals but   smart contracts and algorithm bitcoins and many 
other digital native assets actually stand out   from the legacy digital payments method such as 
those run by visa and paypal in that they remove   all middlemen from transaction so say for example 
let's buy a cup of coffee right now and we are   using our credit card to pay for the cup of coffee 
a financial institution actually sits between us   and the business with control over the transaction 
retaining the authority to stop pause or record   it in this private ledger so with bitcoin this 
institution actually being cut out of the picture   so direct portrayals aren't the only type of 
transaction all contracts overseen by these   big companies financial applications such 
as loans insurance crowdfunding derivative   batting and many more are also in their 
control cutting out middlemen from all kinds   of transactions is one of the primary advantage 
of defined so why is ethereum most applications   that call themselves defy actually built on 
top of ethereum the world's second largest   cryptocurrency platform which sets itself apart 
from the bitcoin platform in that it's easier to   use to build other types of decentralized 
applications beyond simple transaction   this more complex financial use cases were 
also highlighted in the original ethereum   paper back in 2013.

So the most popular 
type of default applications include   decentralized exchanges decks for short stable 
coins landing platform red bitcoins wptc   prediction markets so what exactly are orders 
decentralized exchanges decks online exchanges   actually help users exchange currencies for 
other currencies whether it's us dollars for   bitcoin or ether for diet decks are hot type of 
exchange which connects users directly so they can   actually trade cryptocurrency with one another 
without trusting intermediary with their money   stablecoin a cryptocurrency that is actually 
tied to an asset outside of cryptocurrency   the dollar or euro for example to stabilize the 
price landing platforms this platform actually   use smart contracts to replace intermediaries 
such as banks that manage lending in the middle   rep bitcoin wbtc a way to actually send bitcoin 
to the atm network so that bitcoin can actually   be used directly in ethereum defy system 
wbtc actually allows users to actually earn   interest on the bitcoin they land out via the 
decentralized lending platforms described above   prediction market markets for betting on the 
outcome of future events such as election the goal   of d5 versions of prediction market is to offer 
the same functionality but without intermediaries   so in addition to these applications new defy 
concepts have also sprung up around them some of   them are things we are familiar with such as your 
yield farming liquidity mining compressibility as   well as money lego for knowledgeable traders who 
are willing to take on risk there's yield farming   where users actually can scan through various 
defy tokens in search of opportunities for   larger returns liquidity mining when defined 
application entice users to their platform   by giving them free tokens this has been the 
busiest form of view farming yet compressibility   defy apps are actually open source making the 
code behind them is public for anyone to view   as such these apps can be used to compose 
new apps with the code as building blocks   money lego putting the concept possibility in 
another way defy apps are like labels the toy   blocks children clicks together to construct 
building vehicles and so on the file apps can   be similarly snap-on together like money 
legos to build new financial products   so that's because of ethereum platform for 
smart contracts which automatically execute   a transaction if certain criterias are met 
offering much more flexibility ethereum   programming language specifically designed for 
creating and deploying such smart contracts you   can actually think of ethereum as spotify it's a 
host for item application to sit on your popular   dogecoin and uni swap all sits on the equivalent 
blockchain technology ethereum actually uses erc20   token so these tokens actually based on ethereum 
are the most popular and interchangeable tokens   which means that there is no difference 
between the same token of this standard   erc20 token can actually be considered as the 
simplest unit of account for a variety of users   including currency bonus points credit insurance 
bearing bonds and much more they support virtually   unlimited division and can be sent in fractional 
pieces since tokens of this type are very popular   it is important to develop a simple way to 
exchange between them with a set of smart   contracts you need swap standardizes the exchange 
mechanism for erc20 token anyone can create   interface that connects to these contracts and 
nearly exchange token with anyone who uses unison   in fact uniso is an ethereum exchange 
built using contracts and liquidity   pool as opposed to the order book of a 
traditional centralized exchange such   as binance with an ethereum wallet users 
can simply connect to the uniso application   and effortlessly exchange erc tokens without first 
sending them to the exchange platform account   in traditional crypto exchange like coinbase pro 
a price is actually based on supply and demand   where the highest price is the one for which 
someone is willing to buy and the lowest price   is the one where someone is willing to sell in 
the image below we can just see the highest btc   bid price on coinbase pro is 9301 dollars 
and 36 cents and the lowest bid price was 9   301 dollars and thirty seven cent instead 
uni swap users exchanged contracts to prove   both ethereum and a specific token into one pool 
when exchanging et ethereum for a token ethereum   is actually sent to the contract pool and the 
token is returned to the user as a result the   trader does not have to wait for a counterparty to 
exchange or worry about specifying a price since   anyone can list a token end users do not have to 
think about matching a token to anyone we easily   avoid the problem of providing initial liquidity 
the amount that is written after the exchange is   based on an automatic market maker formula so this 
chart this chart actually helps to illustrate how   this formula works essentially the amount returned 
to you depends on the ratio of ethereum to token   in the pool regardless of the amount the user is 
guaranteed to complete his transaction because the   more asset you add to one side of the pool the 
further along the curve he moves to you to the   another set this means the bigger the bit relative 
to the pool the smaller the beat you will get   but if users only send a cryptocurrency 
how is the current token price maintained   answer is that buu maintains a price balance with 
external markets through traders who arbitrage   between pools imagine that that thai ethereum 
pool are expressed as weights and when they are   balanced the pool is a approximate value relative 
to the market price of a centralized exchange   suppose the current dollar price of ethereum on 
a centralized exchange is 150 dollars and the   ratio in the uni swap die to ethereum pool 
returns 150 die for one eq as a result we   are balanced because the pool corresponds to the 
current market price on a centralized exchange   since unit swaps trades occur on chain a 
transaction fees must be paid each time a trade is   made the higher transaction fee a user pay higher 
gas price for example the higher likelihood the   you know if the miner will actually prioritize the 
transaction leading to a faster confirmation time   this can lead to escalating transaction fees as 
users compete to be the first in line for a trade   so blockchain transaction fees are double 
age swap the fees are ultimately paid   to miners so high total fees create 
more incentive to secure the ethereum   blockchain ethereum's minor revenue hit new 
highs over the summer due to the rise in fees   and as a result ethereum hash rate is climbing 
towards all-time high this is a good sign for   ethereum as network security is critical for the 
long-term health and success of the blockchain   however high fees can also make it prohibitively 
expensive for some users to send feed transactions   fees are not proportional to the amount of 
value transferred sending hundred dollars   or hundred thousand dollars would actually 
cost the same amount of ethereum in fees   therefore high fees actually keep the skills 
towards wheels and users who are transferring   relatively large amounts while making harder 
to turn the profit investing small sum   however hoops are not all laws for small traders 
like uni so ethereum has actually announced the   layer 2 project so with the layer 2 project it 
will actually allow allow etm to actually scale   which will actually reduce the minor fees for 
small users like you and i so i hope that this   session has been rather informative for you thank 
you for watching and if you like my video please   do support me by using the links in my description 
this will actually mean a lot to me and help me   grow my channel as well thank you so much for 
your time and please do like share and subscribe   and leave a comment down below on what is the most 
informative part of this session today thank you

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