What is Decentralized Finance

• Decentralized Finance (DeFi) is a financial system built on blockchain technology, which allows people to manage their own money without the need for banks or other middlemen.

What is DEFI Farming?

• Farming on a DeFi project means lending or staking your cryptocurrency to earn more of that same cryptocurrency or other rewards.

What is a liquidity pair on a Decentralized Exchange (DEX) in DEFI?

• A liquidity pair on a Decentralized Exchange (DEX) is a combination of two different cryptocurrencies that people can trade with each other.

What is a liquidity provider on a Decentralized Exchange (DEX) in DEFI?

• A liquidity provider on a Decentralized Exchange (DEX) is someone who puts their cryptocurrency into the liquidity pool for a certain pair.
• This helps make sure there's always enough of each cryptocurrency available to trade, and in return, the liquidity provider earns a small fee.

What are the Pros and Cons of being a Liquidity Provider in DEFI?

Pros of being a liquidity provider on a Decentralized Exchange (DEX) include:

• Earning rewards for providing assets
• Helping the exchange run smoothly
• Potential for price appreciation of the assets
• Increased exposure to a wider range of assets.

Cons of being a liquidity provider on a Decentralized Exchange (DEX) include:

• Impermanent loss, which means the value of your assets can decrease if the price of the assets in the liquidity pair changes
• Risk of loss if the exchange is hacked or has a technical issue
• Need to continuously monitor the exchange to ensure the assets are safe
• Potential for decreased liquidity if too many people try to sell the assets at the same time.

Last Words...

• DEFI is a new investment type where the world of computers and software meet the world of finance and investing.
• Many new investment strategies are being created, but many of them are old strategies with new types of assets and a different regulatory environment.
• Investors are attracted to DEFI because the yields are much greater then tradition stocks right now.
• But the assets are very violatile in value, being worth dollars one day and pennies a week later.
• Investors are at risk of lsing everything, but also making large sums of money.
• The popular theme is to only invest what you can afford to lose.
• Thats it.

@shortsegments

Here are ten references to help you learn more about DeFi:

DeFi Pulse (defipulse.com)
Binance Academy (academy.binance.com/en/topics/decentralized-finance)
DeFi Rate (defirate.com)
DeFi Wiki (defi-wiki.io)
DeFi Reddit (reddit.com/r/DeFi)
DeFi News (definews.com)
ConsenSys (consensys.net/resources/defi)
DeFi Market (defimarketcap.com)
DeFi Alliance (defialliance.io)
DeFi Buzz (defibuzz.com)
LeoGlossary: Main Menu
Decentralized Finance
Decentralized Exchange (DEX)
Liquidity Pool
Token