defi

In a nutshell, decentralised finance (DeFi) is like an entire financial system for cryptocurrencies. While Bitcoin was the first to successfully put money onto the Internet, DeFi aims to create the system for that money to keep moving, working and finding meaningful value. Just like any currency benefits from being part of a healthy financial system, cryptocurrencies benefit from being part of a DeFi ecosystem.

In coming years, central bank digital currencies, other tokenised assets such as digital gold, real estate or energy and cryptocurrencies like Bitcoin will all become digital assets in the DeFi ecosystem.

1.What is DeFi?

• Decentralized finance (DeFi) refers to a new form of finance that is open-source, digital, decentralized, and blockchain-powered to enable individuals to have full control over their finances when accessing financial services such as borrowing, lending, payments, insurance, derivatives trading, and more.
• Decentralized finance, or DeFi for short, is what the Ethereum community calls financial smart contracts, decentralized applications (DApps), and protocols built on Ethereum. Popular DeFi products include decentralized exchanges, lending and borrowing markets, tokenized physical assets such as gold, derivatives, prediction / betting markets, payment networks, insurance, etc.

2.What is a decentralized exchange? 

• A decentralized exchange, or DEX for short, is like a stock exchange run by a smart contract on the Ethereum blockchain. Although both allow you to trade assets, a decentralized exchange trades cryptocurrency only and so does not require a centralized authority to operate.  
• DEXes are perfect for trading ETH or tokens on the blockchain without having to rely on a centralized authority like a traditional cryptocurrency exchange. Trading on a DEX reduces some risk because you keep your ETH and tokens in your wallet instead of placing them in someone else’s control. Trades are made by transacting with the DEX’s underlying smart contract and the only time your funds leave your account is to execute a trade.

3.How does DeFi work?

A DeFi ecosystem is built on two characteristics of blockchain technology:

• It can be reliably tamper-proof and largely automated
• It can be programmed to interact with cryptocurrency
• With these characteristics it’s possible to create decentralised applications (dApps) that automatically interact with money in many different ways, without needing banks or other intermediaries. As more dApps are built and as they increasingly integrate with each other, the DeFi ecosystem becomes more effective. The key to understanding DeFi is to understand the different types of dApps that make up the DeFi ecosystem, what they can do and how they all fit together. For example, consider how a simple “swap” dApp, which people can use to trade cryptocurrency with each other, improves as it links up with other elements of a DeFi ecosystem.

4.How does Defi and Cryptocurrencies work together?

Cryptocurrencies are digital tokens for use in DeFi ecosystems. The best known are Bitcoin and Ether (the native resource of the Ethereum blockchain), but beyond them there are countless more, including many created for use in specific dApps.

The main cryptocurrency and token types include:

• Governance tokens. These entitle holders to participate in the governance of a dApp.
• Admission or gas tokens. These are used as access or to pay for services on specific dApps.
• Staking tokens. These are used as blockchain resources in areas that need a separate layer of security over the underlying blockchain fabric.
• Stablecoins. These are designed to be pegged to a fixed price, such as $1 each, for use in everyday payments. They are typically backed by some kind of collateral.
• Security tokens. These are securities, such as stocks or derivatives, which have been tokenised for use in DeFi.
• Asset-backed tokens. These are assets, such as art, cars, real estate, gold, frequent flyer points and coupons which have been tokenised for use in DeFi.
• CBDCs. Central bank digital currencies (CBDCs) are fiat currencies, such as US dollars issued by the central bank, which have been tokenised for use in DeFi.

It’s worth noting that one token can serve multiple purposes at the same time. For example, it’s common for a staking token to double as gas and there’s nothing stopping it from simultaneously being a governance token that’s collateralising a stablecoin loan for everyday payments.

Compound’s cTokens present a nice clear example of this in action. These are cryptocurrencies where interest earned accrues directly to the currency itself in real time.

With bank savings accounts, a small amount of interest is typically paid monthly to funds in the eligible account if they meet certain conditions. With cTokens, the currency itself starts multiplying in your wallet roughly every 15 seconds as it earns interest and it can still be used to make trades or other payments.

Proof of Work algorithm uses computational resources to solve cryptographic problems to secure the network and validate blocks

Define expensive computer calculations also known as mining

In the case of Proof of Work blockchains the miners are rewarded with newly created cryptocurrency as part of the mining process.

the Proof of Stake algorithm uses an election process that selects the node that will validate each block.

Creator of a new block is chosen in a deterministic way determined by its wealth also known as its stake

This election process can use a number of factors including randomization, the number of coins being held in the staking wallet, the staking age of coins, or other factors.

Proof of Stake blockchains the stakers are typically rewarded using transaction fees.

DeFi
Stablecoins

• Aave - an open source and non-custodial protocol to earn interest on deposits & borrow assets
• Akropolis - an undercollateralised lending protocol aiming at DeFi yield optimisation and interest-rate sharing
• Atomic Loans - a lending platform that accepts trustless BTC collateral via custom Bitcoin scripts
• bZx - a decentralized protocol that enables lending and borrowing for margin trading
• Compound - an open-source money market protocol on Ethereum that lets users lend or borrow assets against collateral
• Cream.Finance - a Compound based open-source lending platform
• DeFiner - a globally available, decentralized lending marketplace to securely borrow and lend digital assets through smart-contracts
• Force Protocol - an open financial platform providing a wide range of financial services including lending, banking and stablecoins
• Kava - a lending platform that accepts a wide range of digital assests for collateral as well as lending & borrowing
• Maker - a decentralized credit platform on Ethereum that supports Dai, a stablecoin whose value is pegged to USD and backed by digital assets as collateral
• Swap Rate - a DeFi interest rate swap tool built on the Opium protocol

• Augur - a decentralized oracle and peer-to-peer protocol for prediction markets on Ethereum that lets anyone create a market around the outcome of any real-world event
• ACO - a decentralized and non-custodial options trading protocol
• Balancer - a non-custodial portfolio manager, liquidity provider, and price sensor
• Bancor - a protocol on Ethereum for non-custodial token exchange using pooled liquidity
• DeversiFi - a high-speed, non-custodial Layer 2 exchange built with STARKs technology, allowing for 9,000+ tps with deep liquidity, low fees, privacy and speed.
• DEX AG - a trading interface that finds you the best price from 11 different DEXes
• dYdX - a non-custodial trading platform on Ethereum geared toward experienced traders
• Gnosis Protocol - a fully decentralized trading protocol that allows anyone to add any trading token pair
• Hegic - an on-chain peer-to-pool options trading protocol built on Ethereum
• Helena - a smart contract platform with gamified prediction markets
• Jelly Swap - a peer to peer trading tool across different blockchains using atomic swaps
• KyberSwap - a permissionless cross-chain atomic swap protocol, enabling trading of tokens across different chains
• Leverj - a secure and decentralized high performance plasma based exchange
• Local Ethereum - a non - custodial peer-to-peer ETH marketplace featuring end to end encryption and on -chain escrow.
• Loopring DEX - a non-custodial Layer 2 DEX built on top of the Looping protocol
• Market Protocol - a protocol on Ethereum which offers tokenized leverage trading of any asset through synthetic pricing
• MCDEX - a decentralized derivatives trading platform for perpetuals & futures
• MerkleX - a decentralized exchange that uses a decentralized clearing network. Merklex allows traders to set limits on what can happen to their funds.
• Nuo Network - a non-custodial platform on Ethereum that provides a decentralized debt marketplace. Users can lend, borrow, or margin trade any supported cryptoasset
• Ren - a provider of inter-blockchain liquidity for all decentralized applications
• Set Protocol - a protocol designed to create, manage, and obtain baskets of tokenized assets
• Synthetix - a decentralized platform on Ethereum for the creation of Synths: on-chain synthetic assets that track the value of real-world assets
• Tokenlon - a DEX with off-chain matching, and on-chain settlment via 0x
• UMA - a decentralized protocol to enable the creation, maintenance, and settlement of financial contracts for any underlying asset
• Uniswap - a fully decentralized on-chain protocol for token exchanges on Ethereum that uses liquidity pools instead of order books
• Veridex - a Mesh connected 0x relayer with trading, swap and market making tools

• Flexa - a payment network that enables merchants to accept digital currencies without the risk of fraud or volatility through off-chain collateralization.
• Fuse - a blockchain payment integration for businesses
• Request Network - an open network for transaction requests. It allows anyone to create, store and access invoices and receipts in a universal, decentralized network.

• Alpha Wallet - a mobile-based wallet built for Dapps. Do everything with only a few taps.
• Argent - a secure smart contract wallet built for simplicity, security and usability.
• Ash - a wallet interface focused on DeFi asset management powered by Melon Protocol
• Atomex - a multicurrency HD wallet with built-in hybrid atomic swap exchange
• Coinbase Wallet - a non-custodial, DeFi enabled mobile wallet that lets you securely store your tokens and collectibles
• DEXWallet - a mobile wallet for decentralized finance
• Eidoo - a non-custodial wallet that allows users to store, exchange and transact cryptoassets with a wide range of DeFi services and tools
• Math Wallet - a multi-chain non-custodial wallet with embedded browser functionality and DApp store
• Meet.One - a multi-chain DeFi wallet, non-custodial and easy-to-use
• Monolith - a decentralised banking alternative, powered by Ethereum
• My Crypto - an easy to use app that helps you create, import, and manage all your wallets
• My Ether Wallet - a free, easy-to-use and open-source client-side interface that helps you interact with the Ethereum blockchain
• Gnosis Safe - a secure way to manage funds and interact with decentralized applications on Ethereum
• HB Wallet - a non-custodial DeFi-enabled wallet available on multiple platforms
• Poketto - a wallet that you can actually show to your parents

• Bamboo Relay - a 0x relayer built to trade, lend, and borrow tokens directly from your wallet.
• Dca.land - an automated & decentralized dollar cost averaging tool
• DDEX - Decentralized Margin TradingTrade with leverage and earn passive income in DeFi
• DeBank - an all-in-one DeFi wallet with on-chain DeFi stats
• DeFi Saver - an easy to use management portal for MakerDAO CDPs and compound protfolios
• DeFi Snap - a simple dashboard that helps visualize all DeFi assets and liabilities
• dForce Network - a decentralized finance protocol, starting with the first synthetic indexed stablecoin - USDx
• Dharma - a peer-to-peer marketplace on Ethereum for non-custodial lending and borrowing of cryptocurrencies built on an extensible open source protocol
• EasyCDP - an interface for MakerDAO that vastly simplifies the process of opening and managing a CDP
• FiatDex Gateway - a simple browser-based interface to interact with the FiatDex protocol which allows users to trustlessly swap fiat to crypto
• Frontier - a mobile interface integrating all DeFi Protocols and Wallets, enabling users to Track, View & Manage positions in real-time without giving away their private keys
• InstaDApp - an intuitive interface on top of the MakerDAO protocol that’s optimized for users lacking advanced technical or financial experience
• iearn.finance - a simplified aggregator that optimizes lending into the highest yielding protocols
• Melon - an open-source, community-run protocol for asset management on Ethereum. Melon lets users create, manage, and invest in decentralized funds composed of ETH and ERC20s
• Totle - a decentralized liquidity provider where you can swap and transfer tokens while automatically getting the best prices from decentralized exchanges
• Unspent - a dashboard for all crypto and open finance activity: investing, trading, lending & borrowing
• Zerion - an easy to use trustless banking interface utilizing popular DeFi protocols

• 0x - a protocol for p2p exchange of tokenized assets. ZRX is the governance token that allows to vote on protocol upgrades, and earn liquidity rewards shared by liquidity providers
• Betoken - An open crypto fund managed by code and meritocracy
• DFOhub - an Ethereum-based Research & Development project that provides a framework for DFO's, on-chain companies with proprietary assets and voting tokens as programmable equities
• EPNS - a service that allows dApps, Smart Contracts & Services to send push notifications to their users in a decentralized way
• Graph Protocol - an indexing and query layer powering most DeFi applications today through open APIs, called subgraphs, that applications can query using GraphQL.
• Nest - a decentralized and transparent price oracles network
• Nexus Mutual - a decentralized insurance platform where people can share risk particularly against smart contract bugs, failure or other black swan events
• Opyn - an insurance and risk management layer for DeFi
• PhishFort Protect - a crypto open source browser plugin that protects users in the DeFi space from phising
• pToken - a trustless and trasparent 2-way peg to teleport tokens across blockchains, without friction
• Tokentax - an easy to use cryptocurrency & DeFi taxes calculator

• Ampleforth - a digital-asset-protocol for smart commodity-money.
• Augmint - a smart contract platform that issues stable tokens targeted 1:1 to the EUR backed by collateral
• DAI - a decentralized stablecoin soft-pegged to the US Dollar
• mStable - a single standard unifying stablecoins swapping and lending that also reduces friction and fragmentation
• Neutral - a meta-stablecoin system built using a basket of multiple stablecoins to generate a lower volatility token with a reduced risk profile
• rDAI - a DeFi primitive that splits principal and interest in DeFi investments, and streams accrued interest to chosen addresses
• Reserve - a decentralized stablecoin protocol enabling global and frictionless payments
• USDx - USDx is a decentralized and synthetic indexed stablecoin introduced by dForce. USDx's underlying stablecoins include USDC, TUSD and PAX
• WBTC - an ERC20 token that is backed 1:1 by bitcoin.

• Celer - a state channels based layer 2 scaling network solution on Ethereum
• Connext - a non-custodial layer 2 payment-channel technology that enables off-chain, instant payments with low (or zero) transaction costs, helping scale the Ethereum network and paving the way for use cases like micropayments
• Lightning Network - a Layer 2 protocol on top of Bitcoin that seeks to improve scalability by moving small and frequent transactions off-chain, allowing for fast peer-to-peer transactions and low fees.
• Liquidity Network - a Layer 2 scalability solution that enables gas-less, near-instant trustless transactions & token swaps
• Loom Network - a DPOS layer 2 scaling solution that allows developers to run large-scale applications on top of Ethereum
• Loopring - an open source protocol for decentralized exchanges designed to provide matching-as-a-service, and its orders are unidirectional and do not differentiate takers and makers giving complete control to traders
• xDai - an Ethereum sidechain with 5-second block times, low gas prices, and a native token that’s also called xDai.

• 0x Tracker - a trade explorer for 0x protocol and decentralized ERC20 token price index
• Coin Interest Rate - a dashboard showcasing borrowing and lending rates for USDC and DAI
• DefiScan - a read-only DeFi profile explorer for Compound, Uniswap, and SpankChain
• Etherscan - a block explorer and muti-purpose analytics platform for Ethereum
• Eth Gas Station - a consumer oriented metrics & analytics platform for the Ethereum gas market
• Loan Scan - a dashboard showing the best rates to earn passive income or lowest rates to borrow crypto
• UniswapROI - a calculator to help you analyze your investments in Uniswap and find the best liquidity pools
• Whois0x - a database of wallet addresses and their linked social media accounts that also provides easy to understand DeFi stats for each address

• Defi Nerd - a lending & borrowing reviews and rates comparison ressource for crypto assets
• DeFi Prime - a list of the best Decentralized Finance Products
• Defi Rate - a trusted resource for DeFi research, news and interviews with a strong focus on lending rates
• EthHub Weekly Newsletter - a trusted resource on all things Ethereum

• Chris Blec - a collection of demos for various DeFi products, targeted to beginner & intermediate users.
• Into the Ether Podcast - a podcast focusing on all things related to Ethereum, the leading blockchain for decentralized applications.
• Wyre Podcast - a podcast where Thomas Scaria interviews founders of top DeFi projects twice a month. Giving insight to their business as well as the technical challenges that they have overcome.

• Bankless - the ultimate guide to crypto finance written by Ryan Sean Adams
• DeFi Tutorial - a newsletter focused on teaching and educating readers about DeFi with hands on video tutorials
• DeFi Value - a place to better understand and evaluate Decentralized Finance
• DeFi Weekly - a weekly in-depth review of technical achievements within decentralized finance
• Dose of DeFi - a weekly newsletter that specializes in deep dives on topics in the space
• EthHub Weekly Newsletter - a collection of the week's Ethereum and cryptocurrency news curated by the founders of EthHub
• The Defiant - a curated list of daily news in the DeFi space explained and conensed down to a digestable level by Camila Russo

• Concourse Open Community - an open community of builders, enthusiasts and researchers working towards a free, bountiful and decentralized future for everyone
• Dai para principiantes - a spanish-first Dai and Defi educational website, tutorials & active community
• DeFi Nation - a DeFi-oriented community featuring discussions, walk-throughs, Q&A calls and more
• Ethereum Italia - an Ethereum focused community in Italy with a strong presence on all social media
• Hola DeFi - a DeFi product directory for the Spanish-speaking community