UNDERSTANDING DEFI: A GUIDE FOR CREDIT UNION MEMBERS
Decentralized Finance, often referred to as DeFi, represents a transformative shift in the financial landscape. Through the power of blockchain technology, DeFi presents a system where intermediaries like banks or brokers are bypassed. What is DeFi? An ecosystem of financial applications constructed on blockchain. With its open- access nature, DeFi challenges the traditional finance model, advocating for a system free from intermediaries.
How Does DeFi Operate? Using smart contracts, primarily on the Ethereum blockchain, DeFi platforms ensure transactions are self-executing when certain criteria are fulfilled. Key Components of DeFi: Lending Platforms: Facilitate lending and borrowing. Decentralized Exchanges (DEXs): Permit direct crypto trading. Stablecoins: Offer stability in the crypto market by tying their value to fiat currencies. Yield Farming & Liquidity Mining: Strategies to maximize returns. The Advantages: DeFi promises accessibility, transparency, user control, and interoperability, potentially revolutionizing the financial sector.
ISSUE 3 | DECENTRALIZED FINANCE & CENTRAL BANK DIGITAL CURRENCIES
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