DeFi Products - Crypto Academy / S4W8- Homework Post for @reminiscence01

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QUESTION 1A

In your own words, explain DeFi products and how it is shaping the present-day finance.

DeFi

DeFi is a short form of Decentralized Finance. It means decentralized block-chain financial system that does not depend on centralized financial third party like banks, exchanges, or brokerages in the financial transaction process.

Decentralized Finance (DeF) is designed to eliminate intermediaries (third-party) from financial transaction process and replaces them with smart contracts so that everyone can easily have access to the financial services they need.

DeFi is made up of applications and peer-to-peer protocols built on decentralized block-chain networks that does not require intermediaries to execute transactions. Decentralized Finance peer-to-peer protocols bye pass third party and provide direct financial transactions to cryptocurrency users. Hence anyone can easily have access to financial products such as:- payment, trading, staking, lending, borrowing etc.

In Decentralized finance (DeFi) system, our crypto assets are highly secured because DeFi applications are registered peer-to-peer and smart contracts on decentralized block-chain networks.

DeFi products

DeFi products are redefined traditional financial services that are built on block-chain networks which eliminate the role of intermediaries to accessing financial services. They provide cryto users flexible access to financial services with high level of crypto assets protection.

DeFi products are decentralized block-chain platforms that offer financial services such as payment, trading, staking, lending, borrowing etc without involving the service(s) of any financial third party like banks, exchanges, or brokerages in the financial transaction process.

How DeFi is shaping the present-day finance

DeFi has obviously made a significant impact in our modern day financial system. This impact has brought a radical transformation in the present day financial transactions. With DeFi block-chain technology, the problem of having to pass through traditional centralized transaction verification are eliminated making financial services simple, very easy, transparent and accessible to everyone.

One other interesting aspect of DeFi financial system is that it takes away intermediaries or third party from being the custodian of our personal/confidential data and our assets and we do not need to take permission or get access right from any third party institution or exchanges to perform transactions.

DeFi is shaping our modern day financial system by introducing applications and smart contract technology which do not only eliminate intermediaries and third-party in the block-chain transaction process, but increases transaction speed and reduces the cost of transaction to a very low level.

QUESTION 1A

Explain the benefits of DeFi products to crypto users.

Decentralized Finance products are blessings to all of us who are cryptocurrency users. The benefits of DeFi products are numerous. I have chosen some of them, I will list and will explain them below.

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Self-custodian of assets:

One of the most important benefits of DeFi products is that it is designed to enable users be the custodian of their crypto assets. Unlike in the traditional centralized financial system where the third parties financial institutions or exchanges are the custodian of our crypto assets, DeFi products allows users to be in charge and to control their assets.

Transparency:

In a decentralized block-chain, every transaction information is displayed publicly on the block-chain network making it available and access to every user on the network. So, DeFi products provide high level of transparency in their transactions.

Permissionless:

Another important benefit of DeFi products to crypto users is that they allow cryptocurrency users the opportunity to control their finances without having to take permission for any from any third party financial institution or exchanges to carry out transactions on the block-chain.

Immutability:

DeFi products are immutable. This means that the records of our transaction on DeFi can not be manipulated in any way because it is running on block-chain network. This block-chain decentralized architecture ensures high security and auditability of our crypto assets transactions.

Programmability:

This is a good benefit of DeFi products to crypto users. DeFi products are open-source decentralized block-chain that features Smart contracts that are programmable. This feature gives cryto project developer opportunity to develop new crypto assets and any other financial instruments which can be added to DeFi products.

Interoperability:

DeFi products as an open-source decentralized blockchain have an interconnected software stack which allows Defi protocols and other applications to interconnect and complement each other.

QUESTION 2

Discuss any DEX project built on the following network

Binance Smart Chain

Binance Smart Chain (BSC) is a block-chain network built by the Binance Chain community to run smart contract-based applications. It is designed to produce high transaction capacity and accept smart contracts into the ecosystem which will give users opportunity to create DApps and other DeFi products.

Binance Smart Chain has the following major DEX projects which includes: PancakeSwap, Lendefi Finance, Autofarm and DeFi Yield Protocol. In this home work, I will discuss PancakeSwap

PANCAKESWAP:

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PancakeSwap is one of today’s largest DeFi protocols built on Binance Smart Chain decentralized exchange. PancakeSwap Dex project enebles users to swap their tokens without involving any third party. PancakeSwap native token (BEP-20 token) is called CAKE.

PancakeSwap is easy, efficient and secured in the swapping of BEP-20 tokens. PancakeSwap is inexpensive and it's transaction time is very fast. When compared with Uniswap, it's average transaction time is 5-seconds faster.

PancakeSwap allows traders or investors to swap their crypto assets by leveraging from user-generated liquidity pools, just like Uniswap DeFi AMM protocol built on Ethereum.

However, PancakeSwap allows investors to stake in the platform and those who stake with PancakeSwap CAKE recieves rewards.

Major Features of PancakeSwap

These are some of the major features of PancakeSwap

Swapping:

PancakeSwap is a DeFi product that enable traders to swap BEP-20 tokens. It is an open source protocol that gives everyone equal opportunity use this platform and swap their BEP-20 token on the exchange.

Farming:

PancakeSwap decentralized finance gives investors opportunity to deposit their LP tokens and lock them up in other to earn CAKE tokens rewards.

Some of the tokens supported by PancakeSwap include:
CAKE -BNB LP
BETH -ETH LP
USDT -BUSD LP
BUSD -BNB LP
USDC -BUSD LP
DAI -BUSD LP
TWT -BNB LP

SYRUP Pool:

PancakeSwap also allows investor to earn more rewards by staking their CAKE tokens in SYRUP Pools. SYRUP pool is a platform where investors can stake their BEP-20 token called CAKE to earn more of the tokens.

Addition of Liquidity:

This is a feature where users must first add liquidity to the pool before farming CAKE token.

Staking:

This is another feature of the DeFi product that enables investor to stake their earned LP tokens to earn CAKE token. This can be done in SYRUP pools.

There are some other features of PancakeSwap, which include; Lottery and NFTs.

TRON BLOCK-CHAIN

TRON Block-chain is a decentralized open-source block-chain network founded in 2017 by Tron Foundation. It is a block-chain based operating system that functions with smart contract which enables users to create decentralized applications. Tron uses proof-of-stake as its consensus algorithm.

TRON was originally Ethereum-based ERC-20 token. In 2018, it's was protocol switched over to Tron block-chain. Tron native cryptocurrency is called Tronix abbreviated as TRX.

There are so many Tron DEX projects eg. Poloni DEX and JustSwap. In this home work, I will like to discuss "JustSwap" because that is the platform I am very familiar with.

What is JustSwap?

JustSwap is a DeFi protocols built on Tron blochchain. It is a decentralized automated liquidity protocol that helps users to swap TRC20 tokens instantly. JustSwap DeFi protocols was launched by JUST (a foundation that develops TRON-based DeFi protocols) to explore the potential of DeFi on the TRON network. It was developed on the constant function x*y=k which determines the price according to the available liquidity of tokens in the pool.

JustSwap fees:

JustSwap collects a minimal trading fee of 0.3% from traders when they swap TRC20 tokens on the platform. This trading fee goes directly to liquidity providers and the platform does not charge any other additional fee.

JustSwap supported wallets:

As has been mentioned above, JustSwap is a TRON-based decentralized exchange, so before you can use JustSwap you would need a TronLink, one of the most popular TRON block-chain wallets. TRON wallet is like your bank account where you keep your cryto assets on the TRON network. With this wallet you can interact with dapps on the TRON block-chain network.

TronLink works in two ways,

• It work as as a browser extension which you can install from the Chrome Web Store.
• It works as a mobile app which you can download from Google Play and install on your mobile phone.

QUESTION 3

In the DEX projects mentioned in question 3, give a detailed illustration of how to swap cryptocurrencies by swapping any crypto asset of your choice. Show proof of transaction from block explorer. (Screenshots needed)

How to swap cryptocurrencies using JustSwap

To complete this task, I logged in to my TronLink Wallet using my Tronlink pro downloaded on my phone and I landed on the Tronlink home page. I then clicked on "Swap" button. See the screenshot below.

After that, I selected the crypto token I want to swap (From TRX to USDT). I entered 5 TRX that I want to exchange for 0.51408 USDT at the exchange rate of 1 TRX to 0102816 USDT and clicked on "Instant Swap". See the screenshots below.

To confirm the transaction, I clicked on "Confirm". After which I was required to entered my password. When I typed in
my password and clicked "Done", my transaction was submitted and the transaction became successful.
Below are their screenshots and the transaction details.

CONCLUSION

Obviously, DeFi block-chain technology has brought a radical transformation in our present day financial system. It has provided an unimaginable elimination of intermediaries in our transaction process which has made financial services simple, very easy, transparent and accessible to everyone.

I am glad to live in this generation where decentralized block-chain technology is taking over the world financial system.

A very big thank you to our prof. @reminiscence01 for giving us this wonderful lecture. God bless you.