DeFi: The Future of Finance and Passive Income
Decentralized finance is a blockchain-based form of finance that does not rely on central financial intermediaries like a bank or a broker. DeFi has become one of the most rapidly growing spheres within the cryptocurrency ecosystem over the past year. The current total value locked in DeFi has exploded to more than $100 billion.
Unlike a bank or brokerage account, a government-issued ID, Social Security number, or proof of address are not necessary to use DeFi. More specifically, DeFi refers to a system by which software written on blockchains makes it possible for buyers, sellers, lenders, and borrowers to interact peer to peer or with a strictly software-based middleman rather than a company or institution facilitating a transaction.
Here are the main applications of DeFi in the Blockchain Ecosystem:
- Decentralized finance, or DeFi, aims to use technology to remove third parties in a financial transaction
This allows both parties to rely on a decentralized system full of trust where there is no chance of corruption.
- The components of DeFi are stablecoins, use cases, and a software stack that enables the development of applications.
The DeFi solution is just a base for thousands of decentralized applications (Dapps) to thrive on. DeFi applications make it possible for users to not only transact on the blockchain but also to participate in high-return investments such as Yield Farms.
- The entire infrastructure and use cases for DeFi have exploded in recent times, and many Dapps are still in development.
Decentralized Exchanges: A fair alternative to Centralized Exchange Systems
Dexes or Decentralized Exchanges are one of the main components of the Decentralized Finance world.
Dexes like Pancake Swap (on Binance Smart Chain) and Spirit Swap (on Fantom Network) allow users to swap their tokens for a range of tokens on the network for minimal fees, unlike centralized exchanges.
You can also use Dexes to earn passive income by:
· Staking your tokens
· Providing Liquidity to the network
These activities allow users to earn high percentage yield returns for just holding cryptocurrency.
If you want to get started with using Decentralized Exchanges like Pancake Swap, you can watch this video:
