Decentralized Finance (DeFi) Products - Crypto Academy / S4W8- Homework Post for @reminiscence01".

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DeFi Products and How it is Shaping the Present-day Finance.

DeFi known as Decentralized Finance is a System that prove to build a peer to peer financial system on the Blockchain technology.
The concept of Decentralized Finance was first conceived with the inception of Bitcoin; having a digital token built on a decentralized blockchain technology. The modern decentralized finance is an evolved form of the original concept going beyond having a digital token as a legal financial tender but expanding to other financial functions such as lending, borrowing, investing, betting, insurance etc. Decentralized Finance does just exactly what the traditional finance system but a different approach.

The traditional finance system have a third party involved in between transacting parties ensuring security of agreements, funds and regulations. This type of system is known to be centralised as every transaction that would be executed is censored and controlled by the third party and this third party can choose to make decisions about the put through of such transaction. It can chose to approve or decline such transaction based on its own term.
To solve the flaws of centralization, decentralized finance has continue to advance connecting decentralization to finance. DeFi proofs to eliminate the third party interference in carrying out financial transaction. DeFi products runs on smart contracts which are programmed codes that automatically execute transactions when certain conditions are met.

Decentralized Finance shows the evolution of finance alongside with contemporary technology and seeks to take the future.
DeFi products has been distinguishable by its features such as peer to peer interaction. There is no third party involved or regulating transaction and no explicit identification of the participating parties. Transactions are fast compared to the delay experienced with the traditional financial systems. It also support executing financial activities with varieties of cryptocurrencies.

Benefits of DeFi Product to Crypto Users.

• Decentralization: One prime benefit of DeFi products is the elimination of centralization. DeFi products are able to function automatically without being overseen by a third party or traditional financial organization. Here, the user has the privilege to manage his fund directly. He owns the keys to his wallet and can choose to carry out any operation with his fund without restrictions or delays from any party or organization.

• High Transactional Speed:When performing financial activity such as transfer of funds with a commercial bank or digital organization, the financial institution takes time to make verifications and decisions concerning such transaction. This can be time consuming especially when making transaction accross different countries or financial institution. DeFi has a high speed as there is no third party involved.

• Low Cost Of Transaction: Financial organization function by employing human workmanship and technical infrastructure which demands cost of maintenance. The cost to manage such workmanship and infrastructure is placed on the customer in terms of high transaction charges. On the other hand, DeFi has no such structure and thus demands less fees for transactions.

• Anonymous: The participants on DeFi are identified by their wallet address and not by personal Identity. This is unlike the traditional financial system which requires KYC (know your customer) before having the privilege to use their services. On decentralized finance there is no database that stores up personal details of its participants and thus transactions can be Carried out anonymously.

• Transparency: The operations of the DeFi products are open access. Every operations can be tracked or seen by anyone as they are being added to the blockchain. This is unlike the the traditional financial organization that enclose the details of transactions. It is difficult to identify or trace their actions when they go biased or become unfaithful to their code of operations.

• Permissionless: Decentralized Finance requires no permission or approval from any body other than the fund holder(trader) to execute. They function strictly on automated smart contract codes that sees to the through put of every transaction.

Pancakeswap DEX on Binance Smart Chain

A very popular DeFi product on the Binance Smart Chain is the Pancakeswap decentralized exchange (DEX). This is unlike the centralised exchanges where central organization holds the private keys and funds of its users. Decentralized Exchange (DEX) holds no private keys and has no custody of its users' funds. It only serves as a market place where financial activities such a exchange of cryptocurrencies takes place.

DEXs promotes peer to peer exchange of digital tokens independent of a central control body. It simply matches the buyer's order to the seller's order to fulfill and execute transactions. Using a Decentralized Exchange doesn't even require registration or filling up personal details. All is needed is to connect a Decentralized wallet and approve transaction as due.

Pancakeswap is a Decentralized Exchange that was launched in September 2020 on the Binance Chain Network and has been the largest
Automated market marker DEX on the network. Pancakeswap function by the Automated Market Marker (AMM) protocol in which orders are executed from a Liquidity pool.
As a DeFi product, it facilitates exchange of cryptocurrencies (BEP 20 tokens), investing cryptocurrencies to earn rewards and staking of liquidity token to partake in Yield mining.

Pancakeswap enables users to swap one cryptocurrency for another from their wallet. The AMM supported by the exchange enable easy swap of token and reduces as these token pairs are already laid in the liquidity pool by other users. Locking up tokens in the liquidity pool gives users the opportunity to earn a passive income from investment. Every swap comes along with a cost of transaction and these trading fees are distributed to those who has contributed to the Liquidity pool.

Reward tokens generated from investment in the liquidity pool can also be staked to participate in yield mining to increase ones return.
Other activities found on Pancakeswap include Gaming (Prediction Market), Lottery, Non-fungible Token (NFT) market and Initial Farm Offering(IFO).

Justswap DEX on Tron Blockchain

Justswap is a Decentralized Exchange that operates on the Tron blockchain. Tron is a blockchain network that supports the development of Decentralized Applications such as Decentralized Exchanges. Justswap allows users to easily exchange TRC Tokens and also become liquidity providers to earn transaction fees. Justswap also function by Automated Market Maker protocol in which buyers and sellers are not directly matched on an order book but execute orders from a pool of liquidity. Trading fees generated from executed transactions are directed to liquidity providers as rewards.

How To Swap On Pancakeswap

The Pancakeswap can be accessed directly through a browser or through a Decentralized wallet like Trustwallet. The exchange and the wallet are two independent platforms but can be connected when necessary to trade.
Here, I will be using the Trustwallet to access the pancakeswap. Open the Trustwallet App and at the foot of the page choose DApps. This shows a list of Dapps that are compatible with the wallet. Under the popular category Pancakeswap can be found. Once clicked, it redirects to the Pancakeswap page where you can perform exchange of token.

If you're using Pancakeswap for the first time on Trustwallet, you'll have to connect your wallet at the top right corner of the page(where arrow indicate). There after go under Exchange and fill in the tokens you wish to exchange and the amount to trade. Filling one will authomatically generate an equivalent value of the other token according to the market price. Then confirm!!

As soon as you confirm to trade, you'll be prompted by your Trustwallet to approve the trade.

Once the trade is execute the transaction can be checked on Bscscan.com directly from a prompt which redirects to a page that gives detail of the transaction. This displays the status of the trade whether successful or not and the addresses involved.

With the above illustration, I have successfully exchanged 0.0202 Binance coin (BNB) for a $10 value of Tether USDT on my Trustwallet using the Pancakeswap decentralized exchange. The transaction fee was charged for $0.42 value of BNB (0.00085) and I have the USDT deposit directly to my wallet.

How To Swap On Justswap

Justswap is a Decentralized Exchange built on the Tron network and it can accessed through the TronLink Wallet. To make an exchange on the DEx, open the TronLink Wallet and go use the Discover at the foot of the page. This brings up a list of Dapps that are supported. Justswap can be found under the exchange category.

Click on Justswap and it redirects to the DEx website justswap.io. Under Swap you can fill in the details of cryptocurrencies you wish to exchange. Here, with my available balance, I wish to exchange TRX for tron based USDT.

Having filled the token you wish to exchange and the amount you wish to trade you'll be prompted to confirm the details of your trade and fill in your wallet password for approval. In this case I wish to buy 2 USDT with 20.84 TRX.

On completion of the trade, you can check the details and status of your transaction. This can be done by using the scan function of the Justswap. Click on the just concluded transaction and you would be redirected to Tronscan page

Here, from the details displayed by the tronscan, it shows my transaction failed due to insufficient energy to complete the transaction and the exchange was unsuccessful.

Conclusion

The contemporary technology prides in making life easier, better and stress free. The financial system just as many other sectors in the world is growing with the advancement of modern technology. Decentralized finance thus eliminates the dependence on centralised financial organization to carry out transactions. It provides decentralization, transparency, low cost of transaction, transaction with speed and so on.
The Decentralized Exchange is a type of DeFi project which enables crypto users exchange cryptocurrencies peer to peer without the involvement of a third party. Pancakeswap and Justswap perform these function and even more.

Cc:@reminiscence01

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