So you might have heard about DeFi...
...and lending pools, liquidity mining, decentralized exchanges, staking, governance tokens and what not. Honestly, this ever-expanding list of fancy terms could go on forever, and it could confuse even the most seasoned crypto veterans among us.
Source: twitter.com
While understandably perplexing at first glance, DeFi is in many ways the natural progression, and some might say - the fulfillment, of the vision that kickstarted the Ethereum project. At the very least, it's a huge leap toward the permissionless Economic World Computer Vitalik Buterin dreamed into existence in 2014 - maintained by a global, open-source community, owned by no one, and open to everyone.
In short, decentralized finance, or DeFi, is an umbrella term referring to a host of new tools and services in the blockchain space, which aim to recreate traditional financial instruments in a decentralized manner. DeFi comprises tools that allow users to lend/borrow, exchange and swap crypto assets securely, without having to trust other parties that would normally be involved.
Most of these functions have been offered in crypto for years. What’s new about DeFi, however, is the fact that all these services now exist as independent and decentralized building blocks. These blocks are not controlled by third parties, mostly governed by smart contracts, and function thanks to the participation of the crowd. Which is you, us, and anyone interested in doing so.
A New Paradigm of Inclusion
Securing uncensorable access to basic financial services, as DeFi does, is of utmost importance. However, empowering the general public to maintain, and hence to gain from this decentralized financial system may be even more important.
Essentially, when participating in DeFi as liquidity providers and such, the public collects the fees that have been traditionally amassed by centralized exchanges and money handlers - which profit whether the market goes up or down. Decentralization has led to a situation in which everyone can now benefit from this activity, rather than it being harvested by a select few. This is where the seemingly outlandish returns that you might have heard about come from.
While the unworldly returns of dozens of percentage points per week may be unsustainable in the long run, this new paradigm of decentralized inclusion will persist. Cryptocurrency markets finally offer the opportunity to invest solidly, hedge against risk, neutralize unpredictable exchange swings, and create returns that are not solely based on speculation.
Building a Bridge
However, nothing in life comes without a catch, and DeFi profits are no exception to this. While immensely profitable and potentially less risky than betting on the success of volatile crypto assets, DeFi, when taken to its most lucrative extreme, is mind-bogglingly complex.
At YIELD App, we have made it our mission to eliminate this complexity, by offering a product that allows everyone to benefit from this new financial system. In times of unprecedented economic turmoil, we intend to establish a safe haven for investors and savers built on these new decentralized financial tools, and make them as accessible as traditional savings accounts and investment packages - if not more so.
With YIELD App, you simply deposit assets, select an investment fund, and watch your savings grow.
DISCLAIMER: The content of this article does not constitute financial advice and is for informational purposes only. The price of digital assets can go down as well as up, and you may lose all of your capital. Investors should consult a professional advisor before making any investment decisions.
