Decentralized finance, or “DeFi,” is a burgeoning ecosystem of financial protocols built on Ethereum that lets users do everything from lending and borrowing crypto to earning interest on their digital assets.

While DeFi protocols have been around for a few years, they exploded in popularity in 2020 as the value of Ethereum (ETH) surged and more users began flocking to the space in search of yield.

So what exactly is DeFi? In this explainer, we’ll break down everything you need to know about this growing ecosystem of financial protocols and applications.

What is decentralized finance?

Decentralized finance, or “DeFi,” refers to the shift from traditional, centralized financial systems to peer-to-peer finance enabled by decentralized technologies built on the Ethereum blockchain.

With DeFi protocols, anyone with an Internet connection can access financial services that have traditionally been controlled by central intermediaries like banks, brokerages, and exchanges.

By deploying smart contracts on Ethereum, DeFi developers can build decentralized applications (dapps) that let users lend, borrow, trade, and invest digital assets without having to go through a middleman. And because these protocols are built on the Ethereum blockchain, they are available anywhere in the world 24/7.

What are the benefits of decentralized finance?

The rise of DeFi protocols has unlocked a world of new possibilities for crypto users. For example, with MakerDAO’s Dai stablecoin, users can take out loans backed by crypto collateral without having to go through a traditional lending institution.

Compound lets users earn interest on their cryptocurrency holdings, while Uniswap lets them trade crypto tokens directly with each other without having to use a centralized exchange.

These protocols also open up new opportunities for yield generation and risk management. By staking their crypto assets in lending pools or providing liquidity to decentralized exchanges, users can earn interest on their digital assets while helping to power the DeFi ecosystem.

And because these protocols are built on the Ethereum blockchain, they offer a high degree of transparency and security not found in traditional financial systems.

What are some popular DeFi protocols?

There are currently over 2,000 DeFi protocols live on Ethereum, with new projects launching all the time. Some of the most popular protocols include:

MakerDAO: Maker is a decentralized lending platform that issues the Dai stablecoin, which is pegged to the US dollar. Users can collateralize ETH or other ERC-20 tokens to generate Dai, which can be used for payments or traded on decentralized exchanges.

Compound: Compound is a protocol that lets users earn interest on their cryptocurrency holdings. Users can supply ETH or other ERC-20 tokens as collateral and earn interest in the form of COMP tokens.

Uniswap: Uniswap is a decentralized exchange protocol that allows users to trade ETH and ERC-20 tokens directly with each other without having to use a centralized exchange. Users can also provide liquidity to Uniswap trading pairs and earn UNI tokens in return.

Synthetix: Synthetix is a synthetic asset platform that allows users to trade synthetic versions of real-world assets like gold, silver, oil, and even bitcoin (sBTC). These synthetic assets are backed by SNX tokens, which can be staked by users to earn staking rewards.

Aave: Aave is a protocol for lending and borrowing cryptocurrencies. Users can deposit ETH or other ERC-20 tokens into Aave’s liquidity pools and earn interest in AAVE tokens.

Or, they can take out loans against their crypto collateral and repay them with interest over time.

These are just a few of the most popular DeFi protocols currently live on Ethereum. For a complete list of projects, check out DeFi Pulse or The Block’s list of leading DeFi protocols.

Conclusion: Decentralized finance refers to the shift from traditional financial systems to peer-to-peer finance enabled by decentralized technologies built on blockchains like Ethereum.

Bitcoin Realized Price is a measurement of the price of Bitcoin that takes into account the total value of all bitcoins in circulation, also known as the “market cap.” It is calculated by taking the average price of all bitcoins in circulation and multiplying it by the total number of bitcoins.

The Bitcoin Realized Price is a useful metric for assessing the health of the Bitcoin market and for identifying trends.

The Bitcoin Realized Price is calculated by taking the average price of all bitcoins in circulation and multiplying it by the total number of bitcoins. The average price is calculated by taking the sum of all prices and dividing it by the number of prices.

The total number of bitcoins is then multiplied by this average price to get the Bitcoin Realized Price.

The Bitcoin Realized Price is a useful metric for assessing the health of the Bitcoin market. It can be used to identify trends, as well as to compare the performance of different exchanges or wallets.

Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.

Bitcoin is unique in that there are a finite number of them: 21 million.

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services.

As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.

Bitcoin Gold is a cryptocurrency. It is a fork of the Bitcoin blockchain that occurred on October 24, 2017. Bitcoin Gold utilizes an algorithm that allows users to mine coins with GPUs, rather than ASICs.

This allows for more decentralized mining. Bitcoin Gold also plans to implement replay protection, meaning that if one blockchain split into two, transactions on one chain would not be valid on the other chain.

Bitcoin Gold was created in response to the development of specialized mining equipment (ASICs), which could only be used to mine Bitcoin. The founders of Bitcoin Gold believe that this centralization goes against the original purpose of Bitcoin, which was intended to be a currency that anyone could mine with their personal computer.

By making it possible to mine Bitcoin Gold with GPUs, the team hopes to make mining more decentralized again. .

So far, Bitcoin Gold has been fairly successful, remaining in the top 50 cryptocurrencies by market capitalization since its launch. It remains to be seen whether or not it will be able to maintain this position in the long-term.

What is Bitcoin Gold Used For?

Bitcoin Gold can be used for peer-to-peer payments and is also accepted by a number of businesses and merchants. Some people see it as a potential replacement for traditional fiat currencies, such as the US dollar or Euro.

Others view it as a store of value, like gold or silver. It is also sometimes used as a way to hedge against other cryptocurrencies, as its price is not as closely tied to the success of Bitcoin.

The term “bitcoin custody” has been used in a variety of ways, but it generally refers to the safekeeping of bitcoin. This can be done through a third party, such as a cryptocurrency exchange, or it can be done through a self-custodial wallet.

When bitcoins are held by a third party, they are said to be in “custody.” The custodian is responsible for keeping the bitcoins safe and secure.

They may also offer other services, such as allowing the owner to trade their bitcoins or providing a platform for buying and selling bitcoin.

Self-custody means that the individual is responsible for keeping their own bitcoins safe. This can be done by storing them in a secure wallet, such as a hardware wallet.

Bitcoins can also be stored on paper wallets or on USB drives. These are considered to be cold storage methods, as they are not connected to the internet and are therefore less vulnerable to hacking.

The main advantage of using a custodian is that it offers security and peace of mind. The custodian is responsible for keeping the bitcoins safe, so the owner does not have to worry about them.

Another advantage is that custodians often offer other services, such as allowing the owner to trade their bitcoins or providing a platform for buying and selling bitcoin.

The main disadvantage of using a custodian is that it adds another layer of complexity to the process of owning and using bitcoin. The owner must trust the custodian to keep their bitcoins safe and secure.

They also have to rely on the custodian for other services, such as trading or selling their bitcoins. If the custodian goes out of business or is hacked, the owner could lose their bitcoins.

Self-custody eliminates these risks by giving the owner full control over their own bitcoins. However, it also comes with its own set of risks, such as losing access to your coins if you lose your wallet or forgetting your password.