What is defi?

• p2p decentralized censorship resistant finance system
  • Bitcoin is just a storage of value, however ethereum enables us to take legacy banking tools and build it into a decentralized p2p system
• Enabling legacy banking tools and infrastructure that settle in a matter of minutes and seconds
• Common defi apps relate to Wallets, lending, borrowing, spot trading, margin trading, interest earning, market making, derivatives, options, money market stuff and more
• No more Middle man

<aside> 💡 Best site on DEFI: https://finematics.com/guide-to-decentralized-finance/

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What are the risks?

• The main risks on DEFI platforms are smart contract risks. ie: the smart contract that is running the protocol gets hacked, and you lose the money that is staked in that protocol.

What is staking?

• it's the act of locking up your tokens to either
  • borrow from it
  • contributing to a liquidity pool and earning APY on it
  • locking it up contributing liquidity for defi lending sites
  • being a validator on a blockchain, example: https://ethereum.org/en/eth2/staking/

What is yield farming

• a subsection of DEFI that allows one to earn yield using defi apps wallets and protocols if
  • you have idle assets
  • often doesnt require buying and selling my existing assets
  • often involve providing liquidity
  • yield often comes in many forms: Interest + marketing-making fees + incentives/rewards from protocol

Some examples with screenshots on yield farming

Robo advisory DEFI Farming

This is a Robo advisor built on the defi platform. It charges a 10% fee but promises a 40 to 50 percent yield.

Risks: You are exposing yourself to intermediary smart contract risks if you do so.