Learn How To Defi Part 1

By xuanling11 | Crypto Learning | 11 Feb 2022

Let’s learn Defi together! I researched online and with my understanding about Defi. I put all the resources I gathered and made a Defi Guide in Notion page here. I shared my Defi cheat sheet here with you.



I layout questions:

What is Defi?

Why Defi?

What are the risks of Defi?


What is Defi?

Defi or Decentralized Finance is a peer-to-peer financial system built on the Ethereum blockchain. It does not need third parties involvement like banks to charge services fees and to transaction your money slowly.  


Why Defi?

In Defi, it can solve:

  • Centralized control: created a single point of failure
  • Limited access: to be more inclusive to the unbanked population which estimated was 1.7 billion people in 2017
  • Inefficiency: multiple charges on foreign transaction fees and other service fees charged with slow transaction speed 
  • Lack of interoperability: artificially created barriers to switching services with high-cost fees
  • Opacity: with no transparency on banks operations and to cause the financial crisis in 2008 



What are the risks of Defi?

There are several risks associated with Defi.

  • Smart contract risk: prone to hacking, and lost total of approximately $2.3B of 83 incidents
  • Governance risk: induce governance attack through minting exceeded governance tokens from hacking
  • Oracle risk: if the cost of corruption is smaller than profit from corruption
  • Scaling risk: particularly in Proof of Stake where stakers have more assets than the entire rest of the participants
  • DEX risk: vulnerable to sophisticated arbitrage bots
  • Custodial risk: lost private and lost control of wallet due to hacking or scams
  • Environmental risk: wasted more energy on mining (up to debate)
  • Regulation risk: overlapping jurisdictions and regulations to bring Defi under banking regulations

Stay tuned for the next cheatsheet!

Photo by Kelly Sikkema on Unsplash
Note: the post was shared on multiple platforms here.

You can refer my previous article lists here
Digital Commodities- the Unlimited Resources of Commodities Has Born
Universal Income in Crypto Way
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Coinbase At Huge Reputation Crisis
CBDCs' Flaw Design
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2022 Prediction #1: L1 Scalability
2022 Prediction #2: L2 Bridges
2022 Prediction #3: Zero-Knowledge Proofs or ZKPs
2022 Prediction #4: Regulated Defi On-Chain KYC
2022 Prediction #5: Institutional Crypto Adoption
2022 Prediction #6: Defi Insurance
2022 Prediction #7: NFTs-Based Communities - DAO 1.5
2022 Prediction #8: Metaverse and NFTs
2022 Prediction #9: Web2 Companies’ FOMO
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DAO The Way Part 2
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Phishing Attacks
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What You May Expect NFTs After 6 Months and Beyond
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DAO The Way Part 5
Lessons Learned From Wonderland DAO
DAO The Way Part 6
Disclosure: The article was written by a delusional author who is possibly a nut job without any questions whatsoever about expertise in the subject matters. You should not believe any words this author wrote or you may experience similar symptoms or even possibly become a nut job.

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