5- 📝Tutorials Section📝 / 💱｜defi-intro

Why DeFi over TradFi

Unlimited access - Anyone can access the blockchain. DeFi provides access to players who have had no access to financial services before and provides better/competitive terms to those who are already using the existing ones.

Decentralization - There is no control asserted by governments and large financial institutions. Thanks to the open source nature of blockchains if a decentralized app contains any special privileges for any parties, all users will be aware those and anyone can create a less centralized fork of that particular protocol.

Transparency - Anyone can read the smart contracts and see for themselves how the dAPP is implemented, agree on the terms and remove any ambiguity.

Efficiency - TradFi products are hard to integrate and combine. DeFi apps on the other hand are composable as anyone can build on top of existing applications. (edited)

DeFi infrastructure

To understand DeFi you must understand the underlying infrastructure otherwise you will be easily outplayed by more educated participants.

Blockchains - How blockchains work is the most important thing to understand. You don't have to have a deep technical knowledge but basic mechanics are must know. Look up what the "blocks" are, spend some time reading about consensus algorithms and the famous double spend problem.

Cryptocurrency - Blockchains have different applications but one of the most popular ones is of course cryptocurrencies. You need a basic understanding of how blockchains make possible cryptographically secured and transferred currencies.

Smart contracts - Smart contracts make possible to write applications on the blockchain. It allows users to trustlessly enforce rules for any type of transactions. Understanding the basic implementation and limits is crucial for anyone interacting with applications on the blockchain.

Oracles - Oracles are data sources that provide information external to the current blockchain. Check the famous price feed problem and look up how Chainlink works for starters.

DeFi basics

Transactions - This goes back to how blockchains work but this part is especially important as you will have to use transactions if you wanna alter the blockchain (transfer tokens from one acc to another, stake some coins, authorize spendings, etc.)

Token protocols - The main ones here are fungible and non-fungible tokens. Read about ERC-20 (governance/utility tokens) and ERC-721 (NFTs) implementations and their interfaces. Interfaces are crucial because if a token implements an interface, any application that handles the functionality can easily integrate with the token and devs can support tokens that will be created in the future.

Tokenomics - Tokenomics is set in smart contracts and can get quite complex but make sure you at least understand the basics. Start with this list: Circulation, supply, burn (reduce supply), mint (increase supply), bonding curve (pricing supply), incentives (staking).

Stablecoins - Excessive volatility is a huge problem for certain players. Stablecoins provide a way for those players to interact with DeFi applications. On top of that it makes it easy to keep your money in Fiat Money on-chain.