How to DeFi 2020? DeFi Trends 2020 Overview (Part 1)

How to DeFi 2020 is an article that helps readers get an overview of the current DeFi 2020 trends.

In the article I mentioned many keywords and Techtipsnreview also had detailed articles for those keywords, attached so that everyone can read and grasp the information as quickly as possible.

What is DeFi?

DeFi = Decentralized Finance (decentralized finance). Financial products and services that apply blockchain technology (especially decentralization) are called DeFi. To understand more deeply about DeFi, you need to read:

1. What is DeFi? » Read the article here.
2. DeFi Simplified: Understanding DeFi in Just 3 Minutes » Read the article here.

DeFi’s features

1. Permissionless (no permission required): If you like it, use it, if you don’t like it, then it’s fine. No one has the right (or can) to prevent you from participating in the use of such DeFi product.
2. Trustless (non-trust): Brothers who have joined DeFi are not worried about this person being scammed (in terms of blockchain). Smartcontract will take care of that part “Trustless”.
3. Transparency (transparency).

To better understand, read what DeFi is above!

Why is DeFi Boom? Boom?

Basic & earliest are DEX exchanges – users trade through wallets, without having to deposit money on the exchange, your keys, you keep.

However, I want you to understand more broadly, not just DEX (decentralized exchange).

It’s like this: Current DeFi applications are revolving around crypto (if you see any other applications besides crypto, please add comments to help me).

The problems in crypto alone are already 1 PAIN-POINT so big that a lot of bigboys are wanting to tackle.

That is liquidity.

Why do you need Liquidity?

You want to buy/sell 1 coin? So who will talk to you?

Another trader, of course.

The process of 1 transaction occurs as follows:

• Each person will place order books at different prices.
• Each matched order book generates 1 transaction.
• Trades occurring at different prices will create waves in the market.
• The closer the Bid – Ask (the bid price and the ask price) to each other, the less volatile the price will be when the transaction occurs.

But if you want to sell a lot of tokens at the same time, the price of the transaction will change and tend to decrease. Due to low buy order volume.

That will not be suitable for traders with big hands. The arising need is:

• Convenient transactions: Anytime, anywhere, unobstructed, transactions from the wallet always, no need for intermediaries.
• Large liquidity (Liquidity).

Read more: What is Liquidity? How to check the liquidity of any coin

So how does DeFi solve this Pain-Point?

For the sake of brevity, in the DeFi mechanism there will be Pools (understand it as a pool or a token/coin reservoir). There, you want to sell ETH (or buy) and get USDT right away (and vice versa). When the water tank is full, more people come to draw water more comfortably.

That’s why Yield Farming & Liquidity Mining was born.

Yield Farming & Liquidity Mining

To get the Liquidity Pool:

Projects need incentives for participants to provide that liquidity pool. So what motivates users (organizations) to give their tokens (Crypto Assets – including tokens, stablecoins, ..)?

We have the concept: Yield Farming & Liquidity Mining.

Yield Farming: Provide liquidity (farmers) to pools to earn (farm) x % profit (of the total amount).

Refer: What is Yield Farming? Learn about the term Yield Farming

Liquidity Mining: Provide liquidity (Liquidity Providers) for pools to collect (farm) rewards when providing liquidity & Governance tokens (Example: $YAM, $CRV, $BAL, $SNX, $MKR…).

As such, the activities that provide liquidity to Liquidity Pools and receive profitable rewards are called farming.

Problem solved:

• Liquidity providers receive rewards (OK).
• Traders have fast & easy transaction liquidity right on the wallet (OK).

PAIN-POINT is resolved => OK.

In addition, in the operation mechanism of Yield Farming & Liquidity Mining, there is a Governance token – a governance token.

Governance Token

Farmers will “farm-farm” rewards including: Transaction fee (1 part) and Token. They are usually Governance tokens (administration tokens).

With these Governance tokens, one can:

• Staking to increase the rate of receiving rewards.
• Voting for changes to the policy of that project.

=> The need to own Governance token keeps increasing.

List of popular projects (and governance tokens) with this model:

(Read all to understand what all these DeFi trending projects are doing).

Read these new DeFi projects articles to understand how DeFi works.

Oracle Blockchain Platform

“Oracle (originally meaning oracle, wise man) in computer science it is a part/system that collects and captures information, real-time events to provide computers, other processors in the system or in the blockchain. As nodes to get the most accurate information in real time when doing consensus.”

So in Blockchain:

Oracle is a solution to help transform data (data – information that people can understand) into Smart Contract (information blockchain can understand).

DeFi projects are mostly focusing on liquidity issues (as mentioned above). This requires real-time & reliable price updates.

That’s why Oracle Blockchain Platform has taken the throne recently.

Emphasis is on:

Oracle projects may not be DeFi projects. They do not issue tokens of the nature of DeFi. But it is directly related to how DeFi projects operate.

So Oracle is often mentioned alongside DeFi.

Understand the nature of Oracle projects, then don’t translate it as Oracle anymore. Just call it Oracle Blockchain Platform.

Project Oracles need to know:

New features from DeFi?

Swap – Swap

Transactions in DeFi people often use the word Swap – Swap.

Money (token) you put into the Pool and exchange for another token. At the same time, other people will get back the tokens you put in.

Such simple. But to understand how Pools & DEXs (swap-allowing) work, read the article about Uniswap here:

This is the most typical way Swap works.

Exchanges that allow Swap need to know:

• Uniswap, Mooniswap, 1inch Exchange.. (Ethereum).
• Trustswap (Tron).

How to catch DeFi Trend? (don’t be a latecomer)

• Understand the essence of DeFi & how it works (refer to above).
• Prepare ETH on the Online wallet to participate in DeFi token investment when the opportunity arises.
• Learn how to use DeFi apps (Uniswap, DEX, Wallet…).
• Pre-install Techtipsnreview Wallet on your phone, soon you can trade Uniswap right on Techtipsnreview Wallet.
• Besides, proactively updating new knowledge about DeFi is indispensable. The market changes very quickly. Encourage you to use Twitter to quickly update crypto information (remember to read selectively).

Refer to the article: USDT Techtipsnreview Wallet User Guide

How to earn from the DeFi trend?

Bigboy (big hand)

Become a Farmer – farming farmer => Provide Liquidity Pool (Automated Market Maker) => Receive rewards (fee & token governance).

This way to receive rewards regularly & safely. But only for those who have a lot of money. If you are retail investors with a small amount of capital, the rewards will be insignificant.

Retail Investors (In terms of retail investment)

Invest tokens of DeFi projects to receive profit when the price increases.

Here are the token investment profit statistics of some DeFi projects:

• $XOR x636 (3 months).
• $DOS x248 (5 months).
• $YFI x147 (20 days).
• $SNX x119 (over 1 year).
• $LEND x108 (12 months).
• $RUNE x68 (10 months).
• $KNC x 142 (8 months).

Crazy!

There are also old projects such as LEND, DOS that increased sharply. Why?

These projects change the mechanism of token – tokenomics, making its utility increase. The demand to buy Buy Demand is greater than the demand to sell Sell Demand, thereby causing the price to increase.

If you want to understand the essence of the tokenomic of these projects, go to Techtipsnreview.net to search for the keywords token.

What is risk on the DeFi Trend?

• Scam token: Many fake tokens are put on trading (on Uniswap a lot of clone and fake tokens).
• The development speed is too fast, some projects are not audited thoroughly, creating holes. YAM had a code problem that caused the number of tokens to be generated 100 times more than it was designed to. YAM price dropped from $159 to $0.28 at the lowest point.

Learn more about YAM: What is Yam Finance (YAM)? Complete set of YAM cryptocurrencies

Future of DeFi (Part 1)

Back in 2017, the ICO trend (most people buy ICO and get xx).

• Players must use ETH to buy ICO projects => stimulate demand to buy ETH.
• ETH increased from $10 to $1400, x140 times.

In 2020, DeFi trends:

• Players who want to join DeFi mostly have to use ETH to swap over.
• Gas fee sometimes increases to 600 Gwei (Crazy !?) Expensive but many people still join because it is still profitable.
• Click on the need to buy ETH to join.

So is the opportunity only in Ethereum.

ARE NOT!

Ethereum is a blockchain platform, DeFi is fomo mostly projects built on Ethereum & requires ETH to join.

But, not only Ethereum, but many other blockchain platforms. And of course, no one wants to be left behind.

• Tron Network is trying to build their DeFi ecosystem with Trustswap » Read the article here.
• Polkadot also has their own universal with full Oracle, smartcontract platform, DeFi, Dex, Polkaswap… » Read the article here.
• And Solana is getting hotter and hotter, slowly moving forward with Serum (FTX’s pet) » Read the article here.
• Others…

Learn more about the potential of these competitors, you will be able to project growth & investment opportunities for yourself.

Stay tuned for Part 2!

Hot Keywords in the future (will be hot in the future):

• Hakka Finance.
• Blackhole.
• LIEN Finance (a project with an operating mechanism similar to MarkerDAO, MRK).

Future of DeFi (Part 2)

Coming soon…

Ok, read here if you have any questions, you can inbox me directly or register for the DeFi 101 course.

If you want to support me, please register via the link here: http://c98.link/DeFi_101

This series of courses is made by the whole Techtipsnreview team, I will share one part, that is: How to invest in DeFi trend for individual investors?

And if you still have any other questions, then chat to ask questions on Techtipsnreview Insights Telegram or inbox me directly at: https://t.me/realFalcon_11

PS: The articles mentioned here are all enthusiastic products from the Techtipsnreview team. If you find it useful, please share it with your friends!