What is DeFi?
DeFi is short for "Decentralized Finance", essentially any decentralized financial application on the public Blockchain.
Some of these applications include DEX (Decentralized exchanges), Lending platforms, Liquidity farming, Wrapped coins, Stablecoins, and more.
Most if not all of the current DeFi applications are currently on the Ethereum network. The Ethereum network is the second-largest cryptocurrency behind bitcoin. Ethereum's smart contracts allow for these DeFi applications to be easily built and accessed by the community.
How do I earn money with DeFi?
You can earn money through Liquidity farming which is where you provide liquidity to a Decentralized exchange. In return, you will receive the fees for providing liquidity to the pool. Examples of DEX are Uniswap and 1inch where you are able to provide liquidity for APY.
Another option is to provide lending in which you are able to able to gain profits through lending out your tokens.
Is DeFi safe?
DeFi is still a rather new space. There are risks of hackers manipulating smart contracts to maliciously take out funds. Though extremely rare on vetted open-sourced DeFi applications.
Despite these risks, DeFi is improving on a daily basis much like traditional exchanges that have been hacked in the past. As time goes on these DeFi platforms will continue to improve the security of the smart contracts.
What is the future of DeFi?
DeFi has been growing at an astonishing rate with over $58 Billion TVL (Total value locked) as of March 2021.
As time goes on DeFi will continue to advance and innovate. There is no stopping the infinite potential of DeFi. Ethereum 2.0 will bring much-needed scalability to the DeFi space as well.