Welcome to the 5th in this 8-part Getting started in DeFi series. In the last lesson we covered Wallets, Buying and more. In this lesson we take a look at basic DeFi projects and protocols. This is an ever-growing list of new projects and protocols being built every day but this is a good place to start.
The full series is as follows:
Introduction to DeFi: This lesson covers what DeFi is, why it's important, and how it's different from traditional finance.
Understanding DeFi risks: This covers the risks associated with DeFi, such as smart contract security, liquidity, and volatility.
Choosing a DeFi platform: This covers the different DeFi platforms available, and how to compare and choose the right one for your needs.
Wallets, Buying and More: This lesson covers the basic steps for getting started with DeFi, including setting up a wallet, buying cryptocurrency, and interacting with DeFi protocols.
DeFi projects and protocols: This lesson introduces some of the most popular DeFi projects and protocols, such as MakerDAO, Compound, and Uniswap, and explains how they work.
Advanced DeFi concepts: This lesson covers more advanced DeFi concepts, such as yield farming, liquidity mining, and composability.
DeFi best practices: This lesson covers best practices for using DeFi, including how to manage risk, protect your assets, and stay up to date with the latest developments in the DeFi space.
Conclusion: This lesson summarises the key takeaways from the course and provides resources for further learning and exploration.
DeFi Projects and Protocols
Decentralized finance (DeFi) has exploded in popularity in recent years, offering new ways for people to manage their financial assets and interact with financial markets. DeFi is built on top of blockchain technology, allowing for trustless and transparent financial interactions.
One of the key features of DeFi is the use of protocols, which are decentralized applications (dApps) that provide specific financial services. Some of the most popular DeFi protocols include MakerDAO, Compound, Aave, and Uniswap.
MakerDAO is a protocol that allows users to borrow and lend cryptocurrency using collateral. The core feature of MakerDAO is the creation of a stablecoin called Dai, which is pegged to the value of the US dollar. Users can collateralize their cryptocurrency, such as Ether (ETH), to generate Dai and use it for lending or borrowing. MakerDAO has also begun a move towards tokenising real-world assets and may even split up its DAO to enable it to have specialised focus across its business.
Compound Finance is a protocol that allows users to earn interest on their cryptocurrency by lending it out, or borrow cryptocurrency by providing collateral. The interest rates on the platform are determined by supply and demand, allowing for a more efficient market for lending and borrowing.
Aave is another decentralized lending platform that allows users to earn interest on their cryptocurrency assets by lending them out or to borrow cryptocurrency by staking a collateral asset. It is also built on the Ethereum blockchain and is designed to be transparent, secure, and fair.
Uniswap is a protocol that allows users to trade cryptocurrency in a decentralized manner. Unlike traditional centralized exchanges, Uniswap does not require users to deposit their funds with a third party, allowing for more control over their assets. Uniswap uses a system of liquidity pools to enable efficient trading of a wide variety of assets. We saw a video on how Uniswap works in previous lessons.
In addition to these protocols, there are many other DeFi projects and protocols that offer a wide range of financial services, such as decentralized exchanges (DEXs), insurance, and prediction markets.
A great way to learn more (apart from watching videos about them) is to visit their websites and read their whitepapers. Here are links to the ones above
MakerDAO - https://makerdao.com/en/
Compound Finance - https://compound.finance/
Aave - https://aave.com/
Uniswap - https://uniswap.org/
Overall, DeFi protocols provide a new way for people to access financial services in a trustless and transparent manner. By using blockchain technology, DeFi allows for more efficient and open financial markets, giving users greater control over their assets.