Blockchain and Cryptocurrency Beginner - DeFi Product
The DeFi products are key elements of decentralized finance. There are a number of DeFi products available and I will be explaining two of them. The two DeFi products I will be explaining are; decentralized exchange DEX and Decentralized wallets
Decentralized Exchange (DEX)
Decentralized exchange is one of the main products of decentralized finance DeFi and is also one of the most used DeFi products. Decentralized exchanges (DEX) have been on a massive rise and increase over the past months. We have seen the emergence of DEX protocols such as Uniswap, Pancakeswap etc. A decentralized exchange (DEX) is not controlled by a central entity or authority, instead, DEX gives users full control when it comes to trading cryptocurrency assets. A typical DEX such as Uniswap runs on the blockchain like the ethereum blockchain, and is fully decentralized. This means that there are no third parties and the transactions are purely peer-to-peer.
Uniswap
Uniswap is basically a decentralized exchange protocol or DEX protocol that operates on the ethereum blockchain. The main uses of uniswap is to users to perform secure peer-to-peer swapping of ethereum-based tokens. When it comes to decentralized exchange DEX, the uniswap protocol ticks a lot of boxes in the DeFi space, which is why uniswap remains one of the most popular and one of the most used DEX in the crypto and DeFi space. On Uniswap, there are no central entity or authority or third party, all transactions are simply peer-to-peer which makes it fully decentralized and one of the best and one of the most secure ways for users to trade their cryptocurrency assets.
The Uniswap is open source, making it readily available for anyone to contribute to it. Uniswap uses smart contracts, and functions through the concept of automated market makers and liquidity pools which are basically pairs of ETH and ERC-20 tokens swapped by users on uniswap. Popular liquidity pools on uniswap are ETH and WBTC, ETH and DAI, and more. Also, there are liquidity providers who add the assets to the Uniswap liquidity pools. Liquidity providers on uniswap earn a proportion of the transaction fees for adding assets to the liquidity pools. UNI is the token of uniswap and is the governance token of uniswap. Anyone who holds the UNI token can partake in the governance, and also, UNI holders can fund liquidity mining pools as well.
Benefits of Uniswap DEX in DeFi
Decentralized - Uniswap is a fully decentralized DEX protocol that allows anyone to securely swap between ethereum based tokens. All transactions on uniswap DEX are fully decentralized which means that the users have full control while using the uniswap DEX protocol.
Peer-to-peer transactions - This is another amazing benefit of uniswap and decentralized exchanges, all the transactions on uniswap are peer-to-peer.
Smart Contracts - Uniswap makes use of smart contracts to execute transactions, operating on the ethereum blockchain network.
Open Source Protocol - This is also one of the benefits of the uniswap protocol because it is open source meaning that anyone can have access and interact with the protocol and also contribute to it.
