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This article mainly introduces "what are the relevant knowledge points of DeFi". In the daily operation, I believe that many people have doubts about the relevant knowledge points of DeFi. The editor consulted all kinds of materials and sorted out simple and easy-to-use methods of operation. I hope it will be helpful for you to answer the questions of "what are the relevant knowledge points of DeFi?" Next, please follow the editor to study!

1. Why do you need DeFi

No matter how important the current financial services facilities are, they are still plagued by many problems. The main root of these problems lies in the existence of centralized, single institutions, which makes all transactions in the traditional financial system under the supervision of a third party.

This deprives individuals of their economic freedom to some extent, and DeFi is to enable every ordinary person to have access to autonomous and equal financial services.

At present, the traditional financial system has the following disadvantages:

Differentiated financial services

Unnecessary supervision and review

Receive the trouble of counterparty risk (counterparty risk)

Lack of the necessary transparency

The existence of the above disadvantages has led to the following consequences:

High handling fees are required for the use of traditional financial facilities

Lack of assets, bureaucratic attention and regulatory review problems caused by geographical boundaries make it impossible for them to diversify their portfolios, resulting in missed opportunities.

Individuals bear excessive and unnecessary counterparty risks

It is with the development of blockchain technology that DeFi has the ability to solve these problems faced by financial institutions through peer-to-peer finance.

2. How does DeFi solve the above problems?

Due to the use of the most popular distributed ledger / blockchain technology, DeFi is significantly better than the traditional financial system, with the following characteristics:

No license required: everyone has free and equal access to all financial services

Audit immunity: everyone can use all financial facilities without being bound by relevant regulations.

Programmable: every contract is pre-programmed and executed in the same way for everyone

Transparency: the internal work of the contract is fully visible on the distributed ledger, thus introducing transparency into the system

Credibility: because of the above characteristics, the whole system can be trusted by every ordinary person.

DeFi gives ordinary people access to their own funds and personal data. Since each contract is programmable, counterparty risk can also be mitigated. DeFi also removes intermediaries from the value chain, resulting in a significant reduction in fees and the time required to complete the transaction. Finally, DeFi also allows people to use their portfolio (Portfolio) to gain passive income (Passive Income).

3. The evolution of DeFi

The original version of DeFi appeared in 2008, and the credit for peer-to-peer digital cash should definitely go to Satoshi Nakamoto's Bitcoin.

On the etheric block chain, DeFi began to show its prototype in these DApp in 2016:

EtherDelta: a decentralized ethercoin / ERC20 token trading platform

WeTrust: financial inclusion based on distributed ledger (Finacial Inclusion)

Etherisc: decentralized Insurance

But this is just the beginning!

In 2017, more DeFi projects began to emerge:

DAI: decentralized stable currency, anchoring US Dollar

VariabL: Yi Taifang Block chain Derivatives (Derivative) trading platform

EthLend: decentralized loan (Lending)

In 2018, DeFi decentralized applications began to form an ecosystem, and different projects gradually formed a closed loop of financial services:

Augur: decentralized Forecast Market (Prediction Market) platform

BZx: decentralized margin loan (Margin Lending) Agreement

DYdX: decentralized cryptographic derivative (Crypto Derivative) protocol

Compound: deposit profit (Interest), loan investment (Invest) or short selling (Short Sell)

Kyber Network: decentralized permit replacement (Token Swap)

MelonPort: encrypted Asset Management

0x: decentralized exchange

Dharma: decentralized lending market, implemented based on Daharm protocol

Loopring: decentralized license trading agreement. The encrypted currency trading and management platform Dolomite.io is based on Loopring.

InstaDapp.io: the mixed use of multiple protocols. For example, it uses Kyber to trade ETH and MKR and then uses the MakerDAO protocol

4. Infrastructure of the new digital economy

Philosophically, the infrastructure of the new digital economy should depend on the choice of users. Even though the number of DeFi projects is growing, more and more investors are interested in it, and the development tools are gradually mature, but the concept of DeFi has only been adopted in a limited range, and it has not yet gone mainstream. From a user-centric point of view, the DeFi project also needs improvements in UX/UI and scalability.

Technically, scalability also depends on infrastructure. For example, the expansion of the Bitcoin blockchain by the Lightning Network (Lightening Network) is also used by the status Channel (State Channel) in the expansion of the ethernet blockchain. Exploring layer 2 (L2) solutions has become an urgent need because DeFi's requirements for transaction throughput have exceeded the current network capacity.

Another technical consideration is robustness. QukiNode helps DApp achieve the service capacity of 24amp 7 without having to deploy its own Ethernet Fong nodes. Reliability is one of the most critical features to be considered when building a financial DApp, and it is equally important that blockchain data can be obtained immediately without any delay. QuikNode provides an environment in which dApp runs reliably, including a trusted, powerful, and validated web3 infrastructure.

The following figure shows the dApp architecture for the new digital economy:

The third layer dApp can use the Ethernet Square high-speed node service of QukNode class to maintain the competitiveness in the ethernet block chain network.

At this point, the study of "what are the relevant knowledge points of DeFi" is over. I hope to be able to solve your doubts. The collocation of theory and practice can better help you learn, go and try it! If you want to continue to learn more related knowledge, please continue to follow the website, the editor will continue to work hard to bring you more practical articles!

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