Decentralized finance (DeFi) is an emerging financial technology based on secure distributed ledgers used for cryptocurrencies.
Decentralized finance eliminates intermediaries by allowing people, merchants, and businesses to conduct financial transactions through emerging technology. Individuals hold money in a secure digital wallet, can transfer funds in minutes, and anyone with an internet connection can use DeFi.
SOUNDS COOL RIGHT???
In comparison with Centralized Finance, DEFI aims to create an environment where the ownership over individuals' funds is not transferred to third parties, such as Bank or Hedge fund.
Silicon Valley Bank is a past, DEFI is a future.
To trade DEFI assets, you need to use DEX (decentralized exchange),which is a peer-to-peer marketplace where users can trade cryptocurrencies in a non-custodial manner without the need for an intermediary to facilitate the transfer and custody of funds. The main purpose of DEX is a swap(exchange) of cryptocurrencies.
Most popular DEXs are Uniswap and Pancakeswap, there are many other DEXs, but they are mainly forks of those two. Each cryptocurrency is a piece of code, called smart contract.
A collection of funds stored inside a smart contract is a Liquidity Pool(LP).
Liquidity pools are one of the foundational technologies behind the current DeFi ecosystem. Users called liquidity providers (LP) add an equal value of two tokens in a pool to create a market. In exchange for providing their funds, they earn trading fees from the trades that happen in their pool, proportional to their share of the total liquidity.
As anyone can be a liquidity provider, Automative Market Makers(AMMs) have made market making more accessible.
BUT... MORE VULNERABLE! That simply means, that the owner of smart contract becomes the owner of Liquidity Pool. Withdrawing LP from the market is most popular SCAM nowadays. Else the owner can hold a large percentage of cryptocurrency supply(emission), which could be sold later and could significantly damage the token price. There are many other tricks used by scammers, e.g. smart contract owner can design a function to mint more tokens, which can be sold. All together it's called RUG PULLS.
So here comes a question is DEFI really decentralized?
Yes, it tends to be, but this technology is in its early development stages and has some vulnerabilities to work with.
I'm so glad that some people are not just forking existing DEX protocols, but are creating a better and more secure environment. Today, I would love to share about SurgeProtocol.
Surge Protocol is the first truly decentralized multi-chain exchange with:
⚡️ Zero trading fees,
⚡️ Built in MEV bot protection and
⚡️ Investor-owned Liquidity pools.
⚡️ Launch a project on SurgeSwap without any starting liquidity!
➡️ How it works
▫️ Trading is made possible by writing the contract functions "buy" and "sell" right on the blockchain explorer. You can buy and sell directly on a blockchain explorer like Etherscan or BSCScan
▫️ There is no need to deposit your funds in any centralized exchange and no need to use a third party tool in order to execute your trades.
▫️ The growing internal liquidity pool can not be extracted from the contract by no party other than by selling tokens.
There are no trading fees while writing the functions to swap BNB/ETH with SRG and SRG with SRG20.- another awesome feature.
▫️ Every new project launching on SurgeSwap pairs its token with $SRG in an un-ruggable liquidity pool!
You can find more information about this amazing protocol at https://surgeprotocol.io/
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