DeFi 101: What to know and what to look for

When bitcoin introduced the world to the concept of a decentralized currency on an encrypted distributed ledger in 2009, it planted the seed for developers and investors to launch a wide variety of projects looking to make use of this design. Without a doubt, cryptocurrency has redefined money and launched a new financial mentality. 

The decentralization of recordkeeping built on open-source principles and trustless transaction technology makes payments and investments accessible to more people than ever. Central banks and overbearing regulations are on their way to obsolescence in favour of blockchain’s transparency and automation. These are the key features of Decentralised Finance that make it compelling and efficient. 

What is DeFi?

What is now widely known as DeFi – Decentralised Finance – is simply the financial instrument market on a blockchain using smart contracts to control transactions rather than traditional centralized intermediaries such as banks, exchanges, or brokerages. Loans, derivatives, asset trading, and interest accumulation can all be done in the DeFi world. Whether you’re interested in specific coins, the projects behind those coins, or want to get into investing in or trading NFTs, or the cutting-edge territory of GameFi, understanding DeFi, and its many extensions will greatly improve your experience.

Getting Started in DeFi

Getting into DeFi is as simple as taking an interest in it. That said, you’ll need a bit of technology to gain access to the DeFi world. Metamask and other wallets that interact with dapps and smart contacts are essential for securely managing assets and projects. 

Decentralized exchanges, such as PancakeSwap, are used to trade and earn any tokens issued in an IDO and can then be used to participate in liquidity pools and farms or enter competitions to win more tokens.

If there’s a particular blockchain ecosystem you have in mind, take a look at their websites. Polygon is one of the hottest networks around right now, featuring over 7000 dapps on its Ethereum-based Web3 scaling platform. Projects publish their developments and opportunities, so following their community on Discord, social media, and their blog is important for timely announcements and updates.

Looking for Launchpads

Now that you’re familiar with the terminology, you could be ready to take the leap. Are you an investor looking to hop onto the next Big Thing? Or do you have a brilliant project in mind that could flourish with the right marketing and audience? Either way, crypto launchpads are the DeFi sweet spot, uniting motivated investors and inventors together with expert marketing resources. 

DeFi has effectively replicated the traditional financial markets and gone beyond them in scope and potential. With open access to anyone with an idea, financing a project has never been easier. Crypto launchpads and incubators such as UpLift DAO are in place to nurture and accelerate the latest new disrupters in nearly every sector, be it business, non-profit, education, or entertainment. Launchpads also provide security for investors by vetting projects and taking on new-project risk. A launchpad can also provide additional resources that an idea’s development team lacks – infrastructure, marketing, and reach to raise capital and clientele.  

For the DeFi world, these decentralized organizations solidify the distributed blockchain ecosystem by bringing together the component communities: builders, investors, and supporting teams to ensure projects are executed legally, soundly, and with stakeholder consensus.

Decentralisation will transform all aspects of the financial industry in the near future. Organisations have mostly realised the efficiency of using technology to improve business processes. As they face scalability issues through their growth and expansion, distributed infrastructure naturally fits the bill for many of these endeavours. Security concerns rose to the forefront even more in the 21st century as businesses increasingly moved online, and so cryptocurrency sought to address some of those weaknesses in the financial system, as well as frustrations with centralised banking obstacles. Although, at the same time, new vulnerabilities were introduced, having a system that is based on open-source technologies and transparent transactions benefits the speed and agility in which exploits can be tracked down and remedied. 

Autonomy also plays a key role here, as a major factor in the popularity of cryptocurrency is that its positioning transcends conventional nationality-based banking. In place of state-mandated corporate regulations, DAOs (distributed autonomous organizations) are loosely structured and democratizing governing entities that can effectively self-regulate as a recognizable production platform in a more efficient and borderless world.

Moreover, in today’s post-pandemic world, consumers expect minimal contact interactions. The internet allowed operations to thrive when physical logistics were halted. Clearly, DeFi makes sense in the evolution of global business.