September 27, 2021
Decentralized Finance

How Can You Take Part in Decentralized Finance

We all know that there are oracle risks, smart contract risks, regulatory risks and what not! You’ve to watch out for many risks and how to mitigate them. What are the rewards you might expect and how to go for OSOM Finance. You need an answer to all these questions.

To be precise,  OSOM Finance is a smart crypto currency diversification app. You can get the app’s features for free without any subscription. It charges a monthly performance fee

Did you know that decentralized finance is very rewarding. If you diligently invest in the crypto space, you’ll play an important role in the DeFi revolution. It requires due diligence to understand the opportunities and risks of DeFi.

What is DeFi?

It stands for ‘Decentralized Finance’.  And, it’s mostly defined in opposition to centralized finance. Decentralized finance is different as it doesn’t rely on the central financial intermediaries. Just like the usual banks or brokerage. It trusts on the smart contracts as per the computer code. However, there’s nothing smart about them. These are contracts written in codes on blockchain. So, it’s totally immutable what we mean by DeFi. Decentralized Finance platforms allow people to borrow or lend funds from each other. They speculate well on the price movements with the help of a variety of assets. They use derivatives to trade crypto with each other and against pools. They also insure against some great risks.

How Did DeFi Begin?

It began in 2015 and the first idea was around Maker. They had the vision to create a decentralized financial system. This was governed by the users for it’s users. It gave borrowers control over their assets. So, whatever you do at Maker was it’s deposit collateral to it. There were famous coins with the popular DAI. It’s pegged to the US dollar and that’s the reason behind it’s stability. The entire protocol governs loan repayment and liquidation of the loan, if it’s not paid.

Later, Vitalik Buterin, one of the founders said that there must be an automated market maker. It should be doable on the blockchain. Then someone said that they will take up the challenge. That’s how ‘Uniswap’ came into existence. This happened around 2018.

Uniswap helps you create tools of any two tokens. The ratio between these tokens provides you the price that anyone can exchange with. There’s a small fee that attracts liquidity in the process.

ICO began in 2017. It was known as ETHLend. In 2020, they rebranded the survey. This allowed people to lend, borrow and earn interest on the crypto assets. They created a pool of liquidity from which people could borrow. After 2020, things took on a quick and different toll.

The foremost thing that you’ll see is that a lot of centralized finances happen on Ethereum. There’s an EOS bit ontology of Neo with stuff like Smart Chain and Near Binance. It’s not featured on the charts, but has a real existence.  This defines most of Ethereum’s volume.

To briefly conclude, the entire ecosystem is hardening depending on the money legos. If you put them together right, the DeFi protocols will be more interconnected.

 

 

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