What is Defi? How does it work ? What is DEFI? Whatever financial service we take or give today, such as ...

                                   What is Defi? How does it work ?

What is DEFI?

Whatever financial service we take or give today, such as loan from the bank, interest on depositing money in the bank, all are the form of financial system. One thing to be remembered here is that all this financial system is under someone's control, such as Reserve Bank, Nation Bank or Federal Bank or Non-Government Financial Institutions. All of them can make changes in financial transactions and we are bound to accept it. Secondly, we do not know how these institutions use our deposits. We cannot even know the address and how their economic condition is because it is centralized and it is up to the institution how much information they want to share with users. 

When this financial system is deployed on a decentralized blockchain by coding a smart contract and it provides all the economic services exactly as it is programmed, it is called decentralized finance or DEFI Because once on the blockchain, all its working system is operated by coding and there is no central control of any kind, so it is called decentralized.

For example – Today you want to deposit one lakh rupees for a period and take profit on it and if you deposit it in the DEFI project, then you will continue to get this profit as the code of that DEFI has been done. Or If you need a loan against your 100 Ethereum then you choose a DEFI project, for this, 100% of your Ethereum will be locked in DEFI and in return you will get a stable coin or that DEFI coin which you can trade and use it for your business. and at the right time you can withdraw your Ethereum by depositing this fund back. The interest you will pay on this loan is divided among the stake holders in that DEFI according to the coding. There are many different types of DeFi projects. Today every single person is bringing DEFI project. Bitcoin and Ethereum are good examples of DEFI which have been running successfully from last many years.

Recently the WazirX exchange has announced its DeFi project whose test will start from next month and the WRX token will be the main role in the DeFi project. You can avail loan service from your WRX and after staking your WRX in this project, you can profit from the transaction fees here. WRX has chosen Matic network for this DEFI because of its fast transactions and its Fees is also very low. WazirX will inform about this in future.

As the DEFI projects are becoming more popular, hackers are also eyeing them. Before investing, check every point of DEFI properly because many fraudulent projects in the name of DEFI are also coming in the market, beware of them do complete research before investing in any Project.