Crypto Academy Week 4 Homework Post for @yohan2on | Decentralized Finance (DeFi)

Hi, Steemians!

This article is my homework for the 4th week of Steemit Crypto Academy.
Our professor @yohan2on taught us under the topic
"Topic 4: Introduction to Decentralized Finance (DeFi) – A new Fintech Revolution (Part 1)" what DeFi is and how it works.
Now, I will briefly explain the following DeFi Dapps:
MakerDAO, Compound, Synthetix, bZx, Uniswap.

MakerDAO

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MakerDAO is a decentralized group committed to enhancing the cryptocurrency economy's stability. A two-token scheme is used in the Creator Protocol. One of them is Dai. It's a stablecoin with collateral support that provides stability. The Maker Foundation and the MakerDAO group agree that a decentralized stablecoin is important for any company or person to reap the benefits of digital currency.

The second is MKR. It's a governance token that stakeholders use to keep the system going and control Dai. Maker Protocol decision-makers are MKR token holders, who are backed by the wider public population and a number of other external parties. On the Ethereum blockchain, the Maker Protocol is one of the most common dapps. It is the first decentralized finance (DeFi) technology to see widespread adoption, and it was developed by a diverse community of contributors, including Creator Base creators, outside collaborators, and other individuals and organizations.

The Maker Protocol is run by people all over the world who own MKR, the protocol's governance token. MKR holders control the Protocol and Dai's financial risks using a scientific governance structure that involves Executive Voting and Governance Polling. This ensures the Protocol's stability, accountability, and efficiency. One vote is equivalent to one MKR token locked in a voting contract.

Compound

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The Compound Finance is a form of DeFi lending. It's an algorithmic money market protocol in more technical words. It could be compared to a free market for capital. It helps users to deposit cryptocurrencies and gain interest on them, as well as borrow other cryptoassets. Smart contracts are used to simplify the storage and control of new capital on the network.

Any user with a Web 3.0 wallet, such as Metamask, can connect to Compound and earn interest. Compound is a permissionless protocol because of this. It means that anyone with a cryptocurrency wallet and access to the Internet can connect with it.

On Compound, the interest rates for supplying and borrowing are set using an algorithm. This means that the Compound protocol changes them automatically according to supply and demand. Additionally, holders of COMP tokens have the right to adjust interest rates.

One of the most common lending and borrowing solutions in DeFi is Compound. Compound is an important part of the DeFi ecosystem, as many other products incorporate smart contracts into their applications.

Synthetix

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Synthetix is a synthetic asset issuance protocol based on Ethereum. Synthetic assets are financial instruments in the form of ERC-20 smart contracts known as "Synths" that track and provide the returns of another asset without requiring you to own that asset, similar to derivatives in legacy finance. On Kwenta, Synthetix's decentralized exchange, you can trade Synths, which include cryptocurrencies, indexes, inverses, and real-world assets like gold (DEX).

The Synthetix Network Token (SNX), Synthetix's native token, is used as collateral for Synths that are released. To comprehend Synthetix, one must first comprehend the usefulness of Synths and their position in the DeFi ecosystem.

Synths monitor the prices of the assets represented using decentralized oracles, which are smart contract-based price discovery protocols, enabling you to retain and swap Synths as though you owned the underlying assets. Synths give you access to assets that are usually out of reach for the average crypto investor, such as gold and silver, and allow you to trade them quickly and efficiently.

bZx

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The bZx is a DeFi lending protocol, which based on Ethereum that allows users; to borrow, lend, and margin trade without the use of third parties. Margin traders had to rely on centralized exchanges(CEXs) in the past.

And while DEXs can have vulnerabilities, CEXs have weak points, that can be exploited. Looming oversight, hacking and sheer mismanagement of funds by people in positions of confidence are all possible CEX weak points.

As a result, the bZx Protocol aims to provide fully decentralized margin trading, among other things. The three tokens that bZx uses: iTokens, pTokens, and the BZRX token, are the most important difference between it and those in its sector. Each of these tokens is important to the operation of bZx.

It also stands out in terms of how it promotes yield farming by giving successful users half of the fees charged with their BZRX token.

Uniswap

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Uniswap is an Ethereum-based decentralized exchange protocol. It's an electronic liquidity protocol, to be exact. To make trades, there is no need for an order book or a centralized party. Uniswap allows users to trade without the use of intermediaries, offering a high level of decentralization and resistance to censorship.

In the absence of an order book, Uniswap departs from conventional digital exchange architecture. It employs a process known as Constant Product Market Maker, which is a modification of the Automated Market Maker model.

Smart contracts called automated market makers hold liquidity reserves that traders can trade against. Liquidity providers fund these reserves. Anyone who deposits the equivalent of two tokens in the pool may be a liquidity provider.



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