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- 1 Decentralized finance (DeFi) is considered a good investment opportunity.
- 2 It provides easy accessibility, security and transparency, interoperability, and innovation.
Anyone with an internet connection can access the financial services. It is built on blockchain technology that provides increased security and transparency. DeFi is a fast-evolving space that leads to investment opportunities.
On the other hand, it is also associated with some risks like high volatility and lack of regulation in the crypto market that ensures protection for investors. There is also a risk of hacking and fraud as it is built on smart contract technology which is vulnerable to code errors and malicious attacks.
The DeFi Projects to Look Out For
There are some DeFi Projects to look at due to the seamless benefits they provide.
- Ethereum (ETH)
Ethereum is a decentralized blockchain platform. It works on a peer-to-peer network that securely implements and verifies application code called smart contracts. It is used to process financial transactions, execute smart contracts, and store data for third-party applications.
It is basically a network of computers that follow a certain set of rules called the Ethereum protocol. It has no central authority governing it.
- Uniswap (UNI)
Uniswap is used to exchange cryptocurrencies and tokens. It works on the Ethereum blockchain. It allows users to swap cryptocurrency tokens easily. To do this, there is no compulsion to sign the account. The platform has a user-friendly design.
It is better known as an automated market maker (AMM). The AMM completes this by using smart contracts to set prices and execute trades.
- AAVE
AAVE allows users to lend and borrow a wide variety of cryptocurrencies. It offers a wide range of DeFi services which include high-yield savings, flash loans, and tokenized real-world assets.
It requires collateral as users will need to deposit crypto to burrow. The project offers a native token (AAVE) that earns interest through staking.
- Lido Finance (LDO)
Lido Finance is a liquid staking derivative for Ethereum and Solana etc which is basically proof of stake cryptocurrencies. It was launched in 2020. It enables users to earn a yield on staked assets without needing to commit their capital for a long period of time.
The Lido protocol allows users to leverage their stacked coins without the need to sell them. It manages users’ withdrawals and deposits along with determining staking reward fees. The project possesses a full list of node operators, validation keys, and records of reward distribution.
- Chainlink
Chainlink is a decentralized Oracle network. It is a trusted network that provides a seamless connection to any API. The project is built on a flexible framework. It provides a leading data oracle providing an important service to fast-growing smart contract platforms.
Conclusion
DeFi platforms make financial services more accessible. This helps the participant to trade, lend, stake tokens, etc. With the help of these platforms, transactions can occur without any geographical restriction.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
