Decentralized Finance (DeFi) is revolutionizing traditional banking. Here’s everything you need to know about this growing sector.
What is DeFi?
DeFi refers to financial services built on blockchain technology, eliminating the need for traditional intermediaries like banks. It includes lending, borrowing, trading, and earning interest on crypto assets.
Key DeFi Protocols
- Uniswap: Decentralized exchange for swapping tokens
- Aave: Lending and borrowing platform
- Compound: Interest-earning protocol
- MakerDAO: Stablecoin creation and collateralized loans
Benefits of DeFi
- 24/7 access to financial services
- No credit checks or applications
- Higher interest rates than traditional savings
- Full control of your assets
Risks to Consider
Smart contract vulnerabilities, impermanent loss in liquidity pools, and regulatory uncertainty. Always research protocols thoroughly and start with small amounts.
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