DeFi is a very common term to hear within the Crypto universe, but what does this set of letters really mean? In a straightforward way, DeFi is an abbreviation of two words, Decentralized Finance, however, there is a much bigger idea behind this decentralized finance system. Come and find out a little more about what DeFi is!
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[ENGLISH VERSION]
What is DeFi?
DeFi represents the decentralization of finances from banks to people, users of the platform. In it, instead of having centralized institutions providing financial products and liquidity, we have several decentralized applications/websites, called DEX, where anyone who has access makes the market by placing liquidity in pools or stakes. In this system, users create their own interest rate based on the supply and demand for the token and the amount of liquidity placed within the platform in the asset pair, a true decentralization of token and asset trading.
It is a gigantic market that allows people to buy and sell cryptocurrencies. Because DeFi is decentralized, not part of any centralized system, it allows people all over the world to be part of DeFi platforms. Because of this, these platforms end up making decisions through DAOs, in which the community votes on proposals to be implemented or not.
Benefits of DeFi
One of the great benefits of DeFi is that you can generate passive income with the tokens that you would be holding and waiting for a possible appreciation. In liquidity pools, you act as a broker, earning transaction fees every time someone wants to exchange one token for another. Imagine that a network creates new blocks every X amount of time and during each block, a series of conversion transactions take place in these liquidity pools in several defis, and when you provide liquidity, you end up earning a little each time someone interacts with that pair.
In addition, because it is a new market, there are several campaigns rewarding those who interact more with a new protocol. These campaigns are airdrops that distribute the project's token to the most active users who complete certain "missions", further increasing the income you get in DeFis.
