Everything You Need To Know To Get Into DeFi

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

By Voyager's Charlotte Haughney-Siller, provided exclusively to Benzinga Cryptocurrency

DeFi assets are getting a lot of recent attention from investors as they change the way we do business and take crypto transactions to the next frontier.

What Is DeFi?

You may have heard the name in the news lately, but what does DeFi mean?

DeFi, short for Decentralized Finance, is a collective term for financial products and services accessible to anyone with an internet connection. The goal of DeFi is simple: shake up the traditional world of finance as we know it by offering a global and open alternative to the current financial system.

To do this, DeFi consists of crypto networks that focus on peer-to-peer transactions, decentralized lending and borrowing, and more. By harnessing the efficiency and power of smart contracts (digital contracts that live on the blockchain), DeFi platforms create a space for lending, borrowing, trading, saving, and earning interest that doesn't require all of the usual bureaucracy and paperwork.

DeFi also uses decentralized applications, known as dApps, to power peer-to-peer financial transactions on-chain. Most dApps are currently built on the Ethereum protocol, which is known as the backbone of the DeFi network. 

Speaking The DeFi language

Below are six common terms that will help you navigate the world of DeFi.

1. Public Keys 

A numerical code, also known as a wallet address, that serves as a means to identify the source of transactions and send or receive crypto through open channels that are less secure. This is because public keys can only encrypt data, not decrypt. To decipher a public key, you need the private key that goes along with it.

2. Private Keys

A numerical code that decrypts data in transactions, allowing for the safe transfer of crypto funds. Private keys enable sending and receiving cryptocurrency without requiring a third party to verify the transactions, are tied to their corresponding public keys mathematically, and are only known by their user for the sake of security of funds.

3. dApps

Short for Decentralized Applications, which are apps that run on a smart-contract platform.

4. DEX

Short for Decentralized Exchange, these serve as peer-to-peer exchange platforms on the DeFi network.

5. Smart Contracts

A blockchain-powered contract containing code that runs DeFi networks, dApps, and more.

6. Gas fees 

The phrase people use to refer to fees charged for transactions that take place on the Ethereum network.

A New Way Of Doing Business

DeFi aims to offer a decentralized alternative to most financial services, and here are a few ways it will promote opportunities for creating financial products that are completely new:

Automate the financial experience

Smart contracts are processed digitally on blockchain technology, so no paperwork and no wait time through the bank for transactions to clear.

Cut out the middleman

Automating the contract process on the blockchain takes away the need for human intermediaries, so you don’t have to engage outside mediators such as lawyers to process agreements between parties.

Efficiency through speed

With no need to rely on different parties or deal with wait times to complete a transaction, DeFi makes doing business a more seamless and fast experience from start to finish.

Accessibility to All

Many of the financial opportunities offered through DeFi platforms are usually reserved for major financial institutions like hedge funds and banks. DeFi aims to close the gap between the individual and the financial oligarchy.

To understand how DeFi works, think of the institutional lending process. To take out a loan through a bank, there are documents to be filed, credit scores to be checked, representatives to speak to, and time to be spent discussing your options and waiting for approvals.

On the DeFi network, you have the option to store your collateral in the system to obtain a loan within minutes and, once your loan is paid off, your collateral is returned to you. Overall, DeFi provides investors with more financial tools and opportunity while also removing the increasingly limiting institutional minutiae.

The Future Of DeFi

The goal of cryptocurrencies, as a whole, is to improve upon the systems we have in place to create a more efficient, scalable and accessible world of finance. Decentralized finance is taking that accessibility a step further and creating a more open monetary ecosystem.

By removing the need for resources like paper contracts and office spaces, cryptocurrency can create a more sustainable and eco-friendly alternative to Wall Street and big-bank institutions.

DeFi is reinventing the world of finance, bringing real plausibility to the term “financial revolution.”

How To Get Into DeFi

Voyager is here to help you discover DeFi the simple way. The idea of traversing through the wide variety of dApps can feel overwhelming to those just starting out in the DeFi space. On Voyager, you can trade a multitude of DeFi assets all in one place, without the complexity and high transaction fees.

Get $50 in Bitcoin when you sign up using code ZING on Voyager, deposit at least $100, and make your first trade. There are 60+ assets to choose from and you can earn rewards on over 30 assets through the Voyager Earn Program when you hold the minimum monthly average balance in the app.

Take your investments to the next frontier.

About Voyager

Voyager Digital Ltd. (CSE:   VYGR;   OTCQX:   VYGVF;   FRA:   UCD2) and its subsidiaries (“Voyager”), is one of the fastest-growing, publicly traded digital asset platforms in the United States. With over 60 digital assets, featuring a wide selection of altcoins, Voyager offers a secure way to trade using its easy-to-use mobile application. Voyager uniquely offers users the ability to earn annual rewards for maintaining a minimum balance in more than 30 different digital assets. Voyager was founded in 2018, to bring a more transparent and cost-efficient solution to trading in digital assets. Through its subsidiary Coinify ApS, Voyager provides digital asset payment solutions for both   consumers and merchants around the globe. To learn more about the company, please visit https://www.investvoyager.com. Use code ZING during app sign up and get $50 in BTC after depositing $100 and making your first trade.

Voyager Cryptocurrency Risk Disclosure

Investment Advice Disclosure: This content is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for digital assets, sectors, or future price movement predictions.

Photo by Pierre Borthiry on Unsplash

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.