HOW TO GET STARTED WITH DeFi?

“DeFi is what happens when you combine the power of crypto with the openness of the internet”??????

?????????????–Nick Szabo

RECOREM has conducted another fantastic Masterclass on how to get started with the #De-fi, with Shalu Panwar , co-founder of TRIKL , as our guest speaker. She has come a long way from being an IIT Bombay graduate to establishing her own startup.?

The event provided a roadmap for those who want to get into #Defi. The event kickstarted with the evolution of the internet and what is #web3.

Web 1.0???????????????????Web 2.0?????????????????Web 3.0?

Read only?????????????????Participatory??????????????No intermediaries

Decentralized??????????????Centralized???????????????Decentralized

USE CASES OF WEB 3.0

??Defi: Ecosystem of financial applications based on blockchain that operates without any third party or central administration

??NFTs: Non-fungible tokens are a new type of digital token where every token is different and holds unique characteristics

??Metaverse: Metaverse is a network of 3D virtual worlds focused on social connection

??Web2 to Web3: so many use cases in #web2 which can be made better in the #web3 world

??DAOs: Entity structure in which tokenholders participate in the management

WHAT IS DEFI???

Decentralized finance is an ecosystem of financial applications based on blockchain technology that operates without any third-party or central administration intervention. it uses a P2P network to establish decentralized applications that would enable everyone to connect and manage their asset regardless of their status and location. It aims to provide an open-source, transparent, and permissionless financial service environment.

BENEFITS???

1. Transparency- Since the #DeFi app is open source, it is entirely auditable to know precisely what the smart contract is doing in terms of functions, user permissions and user data.
2. Transactions are in real-time- The underlying blockchain is updated the moment a transaction is completed, and interest rates are updated multiple times every minute.
3. Many DeFi protocols are open source. Ethereum and other projects are built with open-source code, which is available for anyone to view, audit and build on. Developers can easily connect multiple DeFi applications built on open-source technology to create new financial products and services, without having to seek permission.

TRADITIONAL V/S DECENTRALIZED???

Decentralized finance continues to gain traction in part because it is more open and transparent than traditional finance.

Anybody with programming skills can take part in building financial services and tools on top of the public blockchain.?

User onboarding and easy access is the primary driver of the growth of traditional finance.?

One must obtain proper licences and authorisation from regulators and has limited information about the traditional financial system.

WHAT ARE WALLETS AND TYPES?

Custodial Wallet vs Non-custodial wallet

Non custodial crypto wallets give you complete control of your keys and, therefore your funds.?

Most (but not all) web-based Crypto wallets are custodial wallets and it's very likely that the first time you purchase Crypto via a custodial wallet.

Hot Wallet vs cold wallet?

Hot wallets are always connected to the internet

less secure but have more accessibility prone to Cyber attacks and risk of losing assets?

Cold Wallets are offline wallets, and assets are stored inside the cold wallet

safer but not at all suitable for regular payments

ARC OF DECENTRALIZED FINANCE?

Lending: Offering cryptocurrency loans in a trustless manner. You or a smart contract hold the money instead of banks or a centralised party.?

Collateralized loan- borrowers need to deposit tokens worth more than the loan amount.?

Liquidity: Total value locked without liquidity; there is no DeFi

DeFi protocols provide incentives to the liquidity providers

Low liquidity leads to slippage

USE CASES OF DEFI

1. Asset Management:?

-Solution for network users to sell, buy and transfer digital asset and manage them?-Maintain their sensitive data and the privacy of their account

2.DAOs

3. Synthetic assets:?

-Assets whose value is derived from a different asset or benchmark?

-synthetic assets are tokens that are digital representations of derivatives

4.P2P lending and borrowing?

CHALLENGES IN DEFI?

??Low Liquidity

??Bad User experience

??Smart contract bugs?

??Oracle manipulations?

???Regulations?

And that’s all! Now you have an overall idea of getting started in DeFi.?

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