What is DeFi – Decentralized Finance
Decentralized finance means the ability to access financial products without going through a central party like a bank. Financial products include loans , insurance and fixed deposits that earn interest.
You can be in Kenya and access a loan from nexo.io a company in Switzerland in under and hour. You can also earn interest on your cash from a company in Switzerland while in Kenya. This financial products are accessible to anyone with an internet. With DeFi, there is no central authority like a bank and the financial services are accessible to anyone with an internet connection
This new paradigm of finance has been made possible by block-chain technology.
What can you do with Decentralized Finance
1. Send Money anywhere in the world within minutes
With bitcoin and other cryptocurrencies you can send any amount of money possible within 10 minutes.
2. Borrow Funds with collateral
Decentralized lending works without one party having identify themselves to the second party. The borrower must put up collateral that the lender will automatically receive if their loan is not repaid eg. bitcoin. You can borrow with privacy.
3. Lending your crypto for interest
Make your idle digital assets work for you by lending it out. Start earning up to 12% per annum. The interest is paid out daily and there are no hidden fees.
Advantages of decentralized finance
Excellent customer service
You can get the loan in minutes. You deposit your money in minutes and interest is deposited on your account daily.
It is fast
The current centralized system is very slow. Takes weeks to transfer money to another country. Getting a loan can take a week or even months. Defi allows you to get cash in minutes.
There is no paper work or travel to a banking hall.
Privacy when borrowing
Blockchain allows you to be pseudonomous. You can borrow without having to meet the lender.
You can access financial products as long as you have an internet connection.
Access to financial products 24/7
Unlike the banks that close on weekends as well holidays defi companies operate 24/7.
Decentralized finance apps
There are some decentralized applications offering decentralized finance products that we just highlighted.
- Sending money
Allows you to borrow at relatively fair interest rates. You can also get up to 12 % per annum on your crypto deposits.
In three simple steps you can get access to capital in form of DAI .
- Open a Maker Vault
- Deposit your collateral
- Generate Dai against it.
Compound is a protocol on the Ethereum blockchain that establishes money markets, which are
pools of assets with algorithmically derived interest rates, based on the supply and demand for the
asset. Suppliers (and borrowers) of an asset interact directly with the protocol, earning (and paying)
a floating interest rate, without having to negotiate terms such as maturity, interest rate, or
collateral with a peer or counter party
The Aave Protocol marks a shift from a decentralised P2P lending strategy (direct loan relationship between lenders
and borrowers, like in ETHLend) to a pool-based strategy. Loans do not need to be individually matched, instead
they rely on the pooled funds, as well as the amounts borrowed and their collateral. This enables instant loans with
characteristics based on the state of the pool.
On Sablier, time means money. As a worker, you see your earnings increasing in real-time in the Sablier wallet. As an organisation, the technology helps you get rid of the hassle of payroll admin. After a one-time deposit, the smart contracts will start “streaming” the money towards the payees.
You just hold on to your crypto assets on OKEx and start earning interest on it.