If you have ventured into crypto-twitter lately, you have probably stumbled upon discussions about DeFi and terms like ‘yield-farming’, ‘YAM’ and ‘yearn’. If this left you scratching your head, you are not alone.
They say, the next big thing often starts out looking like a toy. And this just may be true of DeFi.
So what is DeFi?
DeFi stands for “Decentralized Finance”, which aims to recreate the traditional financial system with less, well, middlemen. Many of the traditional actions in the markets such as lending, borrowing, structuring derivative products, and the buying and selling of securities, can now be done through a decentralized open-source network. The vast majority of these applications are currently created on Ethereum, but in principle, other platforms with smart contract capabilities could work too.
What are some common functionalities of DeFi?
To start off, DeFi would not exist without stablecoins. Unlike common cryptocurrencies like Bitcoin which are known for their volatility, a