Thread by @amrali0fx

#Week_2: #DeFi, Day 3: A Beginner’s Guide to (DeFi) by @sid_coelho

Actually it has a lot in common with yesterday's article, so i will try to focus on the new angels.

Crypto promises to make money and payments universally accessible, no matter where they are in the world.

2-DeFi takes that promise a step further. Imagine a global, open alternative to every financial service you use today -savings, loans, trading, insurance and more- accessible to anyone in the world with a smartphone and internet connection.
This is now possible by smart contracts

3- Smart contracts are programs running on the blockchain that can execute automatically when certain conditions are met. Not only that, it has the composability function: meaning we can build on top of it, more sophisticated products, which is called: decentralized apps or dapps

4- Dapp: an app that is built on decentralized technology, rather than being built and controlled by a single, centralized company. think of the apps built on app store! but add decentralization.

Back to DeFi, automated loans negotiated directly between two strangers--

5- in different parts of the world, without a bank in the middle.
Sounds insane Right? Many of these Dapps are live already, whether a borrowing lending protocol as @compoundfinance or other that create stablecoin @MakerDAO and alot more of financial services

6- What differentiates DeFi from the traditional banks?

-At their core, the operations are not managed by an institution and its employee instead the rules are written in code.

-The code is transparent on the blockchain for anyone to audit. This builds a different kind of trust

7- -Dapps are designed to be global from day one, Whether you’re in Texas or Tanzania, you have access to the same DeFi services and networks.

-“Permissionless” to create, “permissionless” to participate, anyone can create DeFi apps, and anyone can use them. Unlike finance today

8- -Flexible user experience: i have pain myself when dealing with bank stuff with the delays, routine and so on

-Interoperable — new DeFi applications can be built or composed by combining other DeFi products like Lego pieces

Intrigued? let's take a look on some of them

9- *Stablecoin and Decentralized Reserve Bank: @MakerDAO with their DAI which is pegged to US dollar, backed by collateral in the form of crypto ( we talked in details about it in the previous summary.

*Borrow and Lend: Compound, a blockchain-based borrowing and lending dapp

10-you can lend your crypto out and earn interest on it. Or maybe you need some money to pay the rent but your funds are tied up in crypto investments? here is a solution. (with a lot of perks than banks)

*Automated Token Exchange: Uniswap, crypto exchange run on smart contracts

11- *Synthetic Assets: Synthetix, it lets users create and exchange synthetic versions of assets like gold, silver, cryptocurrencies and traditional currencies like the Euro. Backed by excess collateral locked into the Synthetix contracts.

*No-loss savings games: PoolTogether

12- So what’s next for DeFi?
Money and finance have been around in one form or the other since the dawn of human civilization. Crypto is just the latest digital avatar, we might see every financial service that we use in today’s fiat system being rebuilt for the crypto ecosystem

13- We’ve already seen asset issuance and exchange, borrowing, lending, custody, and derivatives built for crypto.
a trend we’re seeing is better user experience,
for example: In the future, we expect that crypto wallets will be the portal to all your digital asset activity-

14- just like an internet browser today is your portal to the world’s news and information.
Imagine a dashboard that shows you not just what assets you own, but how much you have locked up in different open finance protocols–loans, pools, and insurance contracts.

15- we’re seeing a quantum leap in what’s possible when it comes to the functionality of money.
The DeFi space will at first play catch up with today’s financial services industry. But over time, it’s hard to even fathom what innovations will come about -

16- when the power to build financial services is democratized to anyone who can write code.

link for the full article: blog.coinbase.com/a-beginners-gu… thanks to @sid_coelho and his contributions