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The YIELD App Beginner's Guide to DeFi demystifies decentralized finance
As regular readers of our blog will know, YIELD App’s mission has long been to simplify the often confusing world of decentralized finance (DeFi) to ensure that anyone is able to take advantage of its wealth creation opportunities.
DeFi has grown to be a formidable force in the cryptocurrency arena, with total value locked now exceeding $76 billion - up from just $914 million this time last year. This mind boggling 8,215% growth reflects the enormous appeal of DeFi, which has opened up a new financial world for many millions of people across the globe.
From the creation of stablecoins in 2017 through to the accessible and profitable world of DeFi banking, this new ecosystem boasts every type of depositing, trading, staking and swapping opportunity a user could imagine. While this presents an appetising smorgasbord of possibilities for users, knowing where to begin can be tricky.
Debunking DeFi for everyone
Launching today, The YIELD App Beginners Guide to DeFi seeks to solve that by laying down everything a newbie to DeFi needs to know to get started. Inside, we cover the very origins of decentralized finance, including how it evolved from the wider cryptocurrency movement and is now transforming it, to practical tips on how anyone can get involved - today.
The guide also provides a handy jargon buster for those just starting out, breaking down some of the key terms used to describe DeFi and its groundbreaking products and services. From here we cover how to deposit stablecoins pegged to a “real-world” fiat currency to earn annual percentage yields (APY’s) not seen in traditional finance for decades.
We go into why this is one of the pillars of DeFi, and one of the reasons it has such broad and promising appeal. In our quick Getting Started guide we give step by step instructions on how to do this using the YIELD App platform, which allows users to earn up to 18% APY on their USDC, USDT and ETH all in one place - no complex trading or numerous gas fees involved.
What DeFi does best
Of course, there is a whole world of DeFi out there and so The YIELD App Beginner’s Guide to DeFi covers every corner of the ecosystem in a brief, need to know format. This includes borrowing and yield farming: two important tenets of DeFi that have also helped to swell its assets over the past year.
Popularised by platforms like Aave, borrowing allows DeFi users to take out collateralized loans against their digital assets (i.e. loans that require you to lock away a certain percentage of the asset you are offering up to guarantee the loan is repaid) and then deploy those loans into other areas of DeFi to generate more yield, aka yield farming.
Yield farming is arguably the backbone of DeFi: the ability to move assets around the entire ecosystem to generate more wealth and assets is what is setting DeFi apart from the wider cryptocurrency space. It is also what will propel it to mainstream adoption, as platforms like YIELD App continue to roll-out products and services that can rival traditional finance.
Staying safe in DeFi
The darker side of DeFi is also not dismissed in our Beginner’s Guide, including information on some of the scams that have put a dent in some investors’ pockets. Inside the guide, we set out some top tips to follow to help avoid scams and keep your money safe.
We also outline why the most important safety measure to take is to do your own research. This is essential to ensure you are placing your digital assets with a reputable company with a strong track record. This is key in the area of DeFi banking as, while many platforms and providers promise ease of use, not all of them can back that up with effective safeguards.
This is certainly only one small part of the DeFi experience, though – which the YIELD App Beginner’s Guide to DeFi demonstrates. With easy to navigate and understand tools such as this guide, those new to DeFi and cryptocurrency needn’t fear this new financial frontier. Instead, they should feel confident to dip their toe into a liquidity pool, or maybe two.