Table of Contents
Main Takeaways
- Decentralized finance (DeFi) is available to everyone, flexible, quick, and pseudonymous.
- How Nigerians can invest in DeFi
- DeFi coins give cryptocurrency users access to a variety of financial services on the blockchain, including loans, lending, and insurance.
- DeFi wants to establish open-source, transparent, and inclusive financial markets that are open to anyone.
With financial applications and services built on the blockchain, decentralized finance (DeFi) has the potential to upend the conventional financial sector.
There are DeFi alternatives for many traditional finance services, and many more are swiftly emerging, thanks to the phenomenal rise the DeFi market has experienced over the past two years.
Keep reading to find out more about DeFi’s foundations, potential and how to include it into your portfolio.
What is DeFi?
DeFi, which stands for decentralized finance, refers to a network of financial applications that were created using blockchain technology. DeFi offers clear financial services that can run without a central authority using cryptocurrencies and smart contracts. Anyone who has a cryptocurrency wallet and some cryptocurrencies are welcome to join DeFi. Additionally, the majority of DeFi ecosystems feature a proprietary token that fuels their distinct native blockchain network.
How Do DeFi Coins Work?
A group of cryptocurrencies known as “DeFi coins” are specific to automated, decentralized networks that employ smart contracts. These coins allow their owners access to a variety of blockchain-based financial applications and services. The native networks of DeFi coins also have a number of other features. For instance, some DeFi currencies serve as governance tokens, giving their owners the ability to vote and manage the currency. In many circumstances, owners can stake their DeFi coins to earn rewards.
Why is DeFi Important?
DeFi offers the ability to develop open-source, fair, and permissionless financial markets that are open to everyone with an internet connection. Other network users can see the transactions and confirm their accuracy. Data on the blockchain is also secure, auditable, and impervious to tampering. Peer-to-peer (P2P) decentralized apps allow users to communicate with the DeFi ecosystem while maintaining full control over their assets (DApps).
How To Use Defi
The following are some of the major ways that people are interacting with DeFi right now:
- Both borrowing and lending are made more affordable, quick, and accessible thanks to open lending standards. Decentralized lending and borrowing also have a lot of benefits. For instance, transactions can be settled instantaneously, digital assets can be used as collateral, and credit checks are not required.
- Many DeFi protocols provide tools to assist users in managing their assets. As a result, you can receive benefits and interest. DeFi also enables you to protect the privacy of your personal information.
- Decentralized exchanges (DEX): With these platforms, you can trade digital assets without the requirement for a dependable third party to retain your money, such as an exchange. Lower fees and complete control over users’ assets are two benefits of a DEX.
- Stablecoins are a type of cryptocurrency that is linked to a physical item in order to lower volatility. They are deeply ingrained in the DeFi market. Stablecoins enables users to protect against losses during times of greater market volatility because cryptocurrency prices can move quickly at times. Always select stable cryptocurrencies backed 1:1 with equal fiat currency to reduce risk.
- Blockchain games: Decentralized gaming is one of the blockchain ecosystems’ more well-known applications. Play-to-earn games are common. DApps, like Axie Infinity, turn playtime into a source of income by rewarding players with fun gameplay and money incentives.
Advantages of DeFi
1. Swift and Adaptable
You don’t need to wait for bank transfers or pay traditional bank fees to execute trades or shift your assets where you desire. Additionally, interest rates are changed numerous times every few minutes and transactions are real-time.
2. Unrestricted and Inclusive
The simple accessibility of financial services is one of DeFi’s primary advantages. DeFi services are available to everyone with an internet connection and a crypto wallet.
3. Transparency
Blockchain technology has made DeFi data impenetrable, safe, and auditable. Other network users have access to view and validate every transaction on the blockchain.
4. Users Can Remain In Charge Of Their Possessions
Applications using DeFi don’t require any mediators or arbitrators. Through non-custodial cryptocurrency wallets or smart contract-based escrow, which retains the deposited tokens until the payment conditions are met, users can always maintain control over their cash inside the ecosystem.
Favorite and Popular DeFi Coins
Users who own DeFi coins have access to a variety of blockchain-based financial services. The top 10 DeFi currencies are listed below for you to consider adding to your cryptocurrency portfolio:
- Uniswap (UNI) is currently trading for $8.66 and has a $6,421,883,007.68 market value.
- Maker (MKR) is currently trading at $955.04 and has a $972,783,960.09 market value.
- Pancake Swap (CAKE), with a $4.20 price tag and a $1,181.99M market value.
- Aave (AAVE) is currently trading at $107.28 and has a $1,500,565,366.22 market value.
- THORChain (RUNE) is currently trading at $2.87 and has a $$959,783,551 market value.
- Klaytn (KLAY), with a $0.298303 pricing and a $912.62M market cap.
- At a price of $6.73 and a market valuation of $733.23M, Convex Finance (CVX) is now trading.
- Currently trading for $1.07 and having a $489,666,391.78 market value, Celo (CELO)
- With a price of $1.37 and a market valuation of $723,916,565, Curve (CRV)*.
- Currently trading for $0.469025 and with a $623,858,958.97 market value, Loopring (LCR).
* Effective August 15, 2022.
Two-Step Guide On How To Invest In DeFi From Nigeria
Are you considering purchasing DeFi coins to add variety to your cryptocurrency holdings? Start trading cryptocurrencies in a matter of minutes on crypto exchanges. Binance is a commendable crypto exchange with one of the highest trading volumes and user base. To purchase DeFi coins on Binance, simply follow the steps below:
Step 1: Make a fiat deposit on Binance via an e-wallet transfer or bank transfer. Verify the fiat channels that are open for your desired currencies.
Optional: To trade a wider range of coins, change the fiat currencies to BUSD or USDT.
Step 2: Use a credit/debit card or a user spot wallet to purchase the DeFi cryptocurrency of your choice.
Conclusion
The traditional financial system is intended to be improved by a large portion of the technology in the DeFi space. This has the potential to produce more accessible financial markets that are open, free, and fair to everyone with Internet access.
DeFi applications will continue to expand and enhance their financial structures as a result of the developing breakthroughs in the cryptocurrency and blockchain sectors, potentially introducing new goods and services.
DeFi might still be vulnerable, though, as it is still in its early phases. Always DYOR before investing in or purchasing any DeFi coins.
