Home Economy Bitcoin : We open the hood of DeFi, how does it work? Bitcoin : We open the hood of DeFi, how does it work? September 5, 2020
Understanding blockchain has never been easy.Understand DeFi either .Step by step, Pascal Tallarida dissects the practical aspects and the functioning of decentralized finance .We talk about it in the podcast: Small point on the terms used in this episode
CiFi: traditional centralized finance Whales: large carrier, large wallet Lending: ready Farming: process of providing liquidity to a protocol WBTC: Bitcoin tokenized on the Ethereum blockchain Liquidity mining: provide liquidity, name similar to farming Governance Token: token which has no intrinsic value, which allows to control the project to which it is associated Broker: link between clients and traders / liquidity.Market Maker: the market maker allows liquidity in the markets by linking the investments made by its clients.Synthetic active: asset that follows the price of another security, for which it was created DeFi investor starter pack
Download the MetaMask Wallet on computer, or Money on mobile to deposit your tokens.
These applications will be the equivalent of your current account, for the money you need on a daily basis; Buy Ether on an exchange platform; Put on a Ledger key the funds that will not move too much, outside the network; Educate yourself on the security of funds; Take your first steps on loan and deposit protocols, such as Aave or Compound.The principle of collateral?
In DeFi, you have to deposit money to borrow.A concept that does not seem obvious, but which can be explained as follows: in centralized finance, the collateral is the borrower and the law.In DeFi, since there is no barrier to entry, it is cryptocurrencies that play the role of guarantee.
Use case ? Trading.
“You got an Apple or Ether stock.You see a great opportunity on Tesla, and you tell yourself what do I do; I sell my Ethers? No.
You are going to borrow money, putting your ethers as collateral.For example, you deposit the equivalent of € 10,000 of Ether, and the smart contract will give you € 5,000.And if the price of Ether drops to the point where your collateral drops below the loan, your Etheres are sold so that the debt can be paid ”.
The equivalent of mortgage credit.
N.B: It also works for going on vacation, without selling your precious bitcoins.Tips
0% interest rate upon creation of the DAI on Maker Dao.The other way to benefit from DeFi is to donate your assets to a protocol, like Compound, to earn interest rates.You can also put your DAI, USDC, USDT or other other cryptocurrencies on Compound to lend money, and have an interest rate, between 1% and 12% depending on the protocols and assets.
The sites we are talking about Keep up to date with upcoming farming operations: https://yieldfarming.info/The Jarvis site: https://jarvis.network/
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About the Author : Valentin Demé Passionate about Blockchain technology and crypto currencies, I am the voice of the Cryptoast podcast.
I also work alongside the editorial staff of Ouest-France, as a culture correspondent.All articles by Valentin Demé.Related Posts.
