Hello crypto lovers! You must have heard of DeFi before right? DeFi stands for decentralized finance and is currently one of the most famous choices in the crypto world. What makes DeFi stands out is the way it eases the consumer and the benefits they obtain from it. If you are new to DeFi, you need to know that there are a number of different types and protocols of DeFi. Some defi developer malaysia would suggest you invest in any of these types. Let’s find out what are the types of DeFi available in the marketplace.
Decentralized exchanges (DEX)
DEX are crypto exchanges that function to conduct peer-to-peer transactions without having to get an intermediary. It is secure and fast and also allows the users to easily swap the currency. For instance, Ether (ETH) for Tether (USDT). Users can be linked directly and they are able to trade any cryptocurrencies freely without an intermediary.
Lending and Borrowing
Crypto lending is almost similar to the traditional ways of lending. You will have to lend different kinds of cryptocurrencies to the borrowers and not real money or paper money. You will get interest payments in return if the investors lend their crypto to the borrowers on any DeFi platforms. Users are able to borrow a crypto asset if they prepare another asset as collateral. Most DeFi platforms allow users to lend and borrow without any third-party involvement. However, many DeFi users have complained about the lending protocol that would require users to use over-collateralization. Over-collateralization (OC) means that the collateral’s provision is obligated to be worth more than enough. This is to cover the losses in case the funds are gone.
“Wrapped” bitcoins (WBTC)
WBTC is like a modified version of Bitcoin. It is a method which would require the transfer of bitcoin to the Ethereum network. WBTC would allow users to earn interest and interact with Ethereum’s DeFi ecosystem and mechanism. Another speciality is that WBTC transactions can clear even faster than Bitcoin transactions. Other than that, it cost less than Bitcoin and would provide you with more storage options and transactions.
Stablecoin is a cryptocurrency which aims to provide an alternative to other popular cryptocurrencies such as Bitcoin. A stablecoin is linked to any non-cryptocurrency asset so that the price can remain stable. Just like the name, the main purpose is to keep its price stable. There are a few types of stablecoins such as flat-collateralized, commodity-collateralized, algorithmic and crypto-collateralized.
Is it Really Worth It?
This is a question that would linger in most people’s minds. Is it worth it? Is it really working? The answers to these questions are in your own hand. You will be the one who is going to make the decision. Of course, everything comes with pros and cons. That’s why we need to think of them before making up our minds. If you are new to crypto, make sure that you are prepared with enough knowledge regarding this matter.