WEB3 & DeFi
Decentralized Finance (DeFi) is an innovative financial system built on blockchain technology that disrupts traditional finance by offering decentralized, permissionless services. Web3 technology is essential for secure and transparent transactions in DeFi, marking a significant difference from Web2.
Web2 refers to the current version of the internet, which relies on centralized servers, and users have little control over their data. In contrast, Web3 aims to create a decentralized internet using blockchain technology, giving users control over their data and enabling peer-to-peer transactions without intermediaries.
DeFi is a set of financial applications on a decentralized blockchain network, enabling users to transact and exchange value without intermediaries like banks. It’s open and accessible to anyone with an internet connection. By using smart contracts we can automate transactions. Web3 technology ensures secure and transparent interactions between users.
Benefits of DeFi include accessibility, transparency, security, decentralization, and interoperability.
To get started with DeFi:
- Set up a cryptocurrency wallet.
- Buy cryptocurrency from an exchange or peer-to-peer marketplace.
- Connect to a DeFi platform (e.g., Matcha, 1Inch, or Blur) using your wallet.
- Start using DeFi services like lending, borrowing, trading, and staking.
Some of the most successful DeFi projects and their approximate revenue as of early 2023 are:
- Uniswap: A decentralized exchange with a revenue of over $1 billion.
- Aave: A decentralized lending platform with a revenue of over $500 million.
- Compound: A decentralized lending and borrowing platform with a revenue of over $400 million.
- Yearn.Finance: A yield aggregator with a revenue of over $300 million.
DeFi is revolutionizing finance with benefits such as accessibility, transparency, security, and interoperability. With Web3 technology, DeFi creates new financial services open to anyone with an internet connection, significantly differentiating it from the current centralized Web2.
