Imagine stepping into a free finance world, where there are no rechecks for approving loans, where opening a bank account takes seconds, and where sending money abroad is a click away. Looks dreamy, right? If you feel it isn’t possible in today’s world, let me whisper something magical to you, “it’s all possible now.”
The term that is reinventing the basis of financial systems and is making it all simple (from investing to borrowing) is decentralized finance or DeFi.
Now you must be curious about this new financial concept. Let’s start with the basics.
Decentralized Finance (DeFi) is a system that takes from the concepts and instruments in Traditional Finance (TradFi), then builds them on decentralized infrastructure and systems. These systems and infrastructures, in other words, are built on top of a blockchain—an emerging technology. The goal of DeFi is to create and provide global access to finance while being more transparent and resilient than traditional financial systems.
The unique aspect of this technology is that it utilizes smart contracts. These are contractual agreements executed with code, without an intermediate to facilitate agreements between two parties.
The following are some of the most popular and well-used types of decentralized financial tools:
Decentralized exchanges (DEXs) offer an efficient way to trade crypto without an intermediary and without giving up custody of your funds. Popular DEXs like Uniswap, Balancer, and Curve are known as automated market makers (AMMs) because they use liquidity pools to manage trades.
If you’re paying off student loans, banks usually charge a very high interest rate. In DeFi, banks are replaced by liquidity pools where anyone can deposit tokens and borrowers can take from and pay back at an algorithmically determined interest rate. The best part is that your money compounds in real time—every 15 seconds!
Instead of a fund manager, you can choose a tokenized asset management strategy to earn passive income on your crypto portfolio. An example of this is the DeFi Pulse Index, which tracks the top market movers.
Stablecoins are cryptocurrencies whose value is pegged to other stable assets like the US dollar. Stablecoins are widely used in DeFi for trading, lending, and borrowing. They’re considered one of the building blocks of the DeFi ecosystem, ensuring stability for transactions.
As DeFi has paved the way for decentralized trading and finance tools, creators and developers are now working together to build even more tools for the community. Gitcoin, for instance, is a platform where decentralized projects are funded, and educational resources are used to build open-source projects.
RoboFi (www.robofi.io) is a Defi platform that envisions a marketplace for revolutionary Dao crypto trading bots. Through its IBO (Initial Bot Offering) system, community members can maximize their earnings in an easy, simple, and secure way. We create a safe and transparent environment based on blockchain technologies that help developers bring crypto trading bot platforms to the market. In addition, individuals will have easy access to these bot applications, thereby generating more earning opportunities. RoboFi ecosystem is fueled by the $VICS token.