What is DeFi? Making Money with Decentralised Finance #Finance

decentralized Finance is a group of platforms and protocols that let us invest our own money without any banks in the middle taking all of our Yields

so in this CashNews.co i’m going to explain exactly what decentralized Finance is what we can do on d5 what protocols and Assets that we can actually

use on these systems and then how people actually go ahead and use defy to invest and make money without the bank in the middle taking all of their Yield i’ll leave the timestamps for each section of this CashNews.co in the description below and some other CashNews.cos and

resources that i mentioned in this CashNews.co will also be linked down there the first thing we need to look at though is stable coins which are by far and away the most important aspect of defy stable coins are just simply a #1a73e8; text-decoration: none;">Cryptocurrency version of a fiat currency you can have any fiat currency turned into a stable coin but obviously everyone’s going to use the dollar as it is the world world reserve currency as you can come down and see the list of

href="https://cashnews.co/crypto" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Cryptocurrencies right here you can see tether and usd coin are two stable coins and they’re number three and four at the moment in the ranking so they obviously have a very large

circulation if you come down as well you can see binance usd another version of a us dollar stable coin a stable coin very simply basically takes dollars and puts it in a bank in a one for one basis so for every dollar that they have in a bank they issue one dollar of this

href="https://cashnews.co/crypto" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Cryptocurrency so you can have busd or usdc or usdt these are just different companies that are doing basically the same thing which is putting dollars in a bank and then issuing on a one-for-one

basis this stable coin now you may be asking well how decentralized is that and the answer is not really unfortunately but that’s the way it is just like everything in life that most things are gray and not black and white and so this is the best way you can get a trusted value of a dollar

into the Cryptocurrency space also as well really important to know is that not every none;">Cryptocurrency is created equal some Cryptocurrencies are very trustworthy in terms of the Assets that they hold in those banks and some are less so so what

you’ll usually find is that a Cryptocurrency holds mostly cash ust bills which are very very short-dated Debt so you can call these kind of near cash instruments and

then a collection of other types of Money Market fund the reason they do this is because all of these actually earn them a Yield so they can take our dollars invest them in Money Market funds for maybe two percent average interest and then pocket

the difference they’re giving us a service though so that’s kind of you know everyone’s a winner if you come to something like tether they actually show you exactly what they hold in their bank in order to back the value of their stable coin i’m going to leave it there it

gets more complex but essentially a stable coin allows us to trade and transact and it is the oil in the engine once you have digital Assets you can create money Markets for

those Assets that’s where people that have Assets can lend them out for an interest and people that need to borrow them can do so and pay that interest so this is exactly what happens with a bank you have a borrower down here who wants to borrow a set amount

of dollars to buy an asset so he has this asset right here and he goes to the bank and they obviously give him an amount of dollars back to him to in order to buy the house now the house is the collateral because in europe anyway essentially if you can’t pay back the Loan

then the bank just takes the house that’s their collateral that they use to lend you the money this is obviously a lender down here and what he does is put his money in the bank to save it right so if you’re a saver you put that money in the bank and that’s the circle of life now

the issue here is that this horrible institution in the middle is taking um a vig from each side you basically get absolutely nothing for saving your money and of course the bank is charging people five percent as an interest rate to borrow money they’re sitting in the middle and

they’re taking five percent and giving nothing back to the saver this is how um you know Cryptocurrency changes this so you have a lender and you have a borrower as always instead of a

house being in the middle you actually have bitcoin bitcoin of course is you know known as a store of value asset it has a value it’s very large and it’s a very liquid market making it a very good asset to collateralize that is if you own some you can use it as collateral to borrow

against so what you do is you go to the institution in this case not this horrible bank but are they i’m using them as an example which is an application that enables lenders and borrowers to meet and then as a borrower you can put your asset on the platform and obviously borrow those us

dollars and you can use those us dollars for you know any reason you want and you’re going to pay an interest rate let’s say uh two percent right right here so are they essentially unlike a bank don’t take the whole uh Profit so as a lender what you do is put your

usdc or your us dollars on the platform and you actually get almost all of what you lend out so the borrower is going to pay 2 is going to pay 2 as an interest rate now are they are gonna take about ten percent of the two percent so they’re going to take a very small amount and the vast

majority actually goes straight back to us as the lender so they is taking a much much smaller amount um only from the borrower when they borrow the rest of it is going straight back to you and you can see that here you can see these supply apys um so we can see exactly if you have dollars like

binance u.s dollar you can actually get a couple of percent interest rate through rv from borrowers and are they is taking a very small amount now just to kind of compare decentralized none;">Finance with centralized Finance here it’s gray and not black and white but essentially on something like are they for us dollars if you want to

lend them out you’re going to be getting around two to two and a half percent that also works for other platforms like trader joe which is a similar platform about two and a half percent if you go the centralized route and you actually uh put your money on platforms like celsius and nexo

they’re actually gonna give you way more so they can lend out um the Assets to traders in a different way so it’s very different to decentralized none;">Finance where things have to be a lot kind of less risky and it has to be kind of downplayed a little bit but on centralized Finance they can lend your

Assets out to traders and actually pay kind of just a higher Yield overall and so if you do want to put your Crypto Assets on these

centralized platforms you know you get customer service and you do get better rates overall i’ll leave some links to those in the description because they do have sign up offers where they give you an amount of bitcoin if you make a deposit so check those links out below so if we hold digital

Assets and we lend and borrow those Assets we can also trade them amongst other market participants as well if we want to swap from one to the other so we can use a decentralized exchange a decentralized exchange isn’t that decentralized to be honest

decentralized exchanges are more about permissionless access rather than being fundamentally decentralized in their nature at least as of making this CashNews.co but we can permissionlessly access these dexes and swap the tokens that we have so just like a centralized exchange you will see one

token that you want to sell so that could be anything you want and then you could swap that into any other token as long as it’s supported on the exchange and also on the blockchain that you’re using each blockchain will have its own decentralized exchange where you can swap one asset

for another and of course this is an extremely important thing to do on a dex you can swap coins but really important with d fire and one of the massive points of decentralized none;">Finance is the ability for normal users to provide Liquidity on the decks this is something that banks and institutions have done for you know hundreds of years basically taking a vig out of the market uh taking trading fees making money off of everything that

happens you know in the financial Markets now we can provide the Liquidity ourselves and earn the trading fees of other people on these dexes so we can actually make passive

Income from these dexes by providing our tokens as a service for other people to trade and we keep custody of our tokens and we can take them back at any time now on a decentralized exchange of course like any exchange you need to sell one token in order to buy another just like

any foreign exchange transaction and so what you’ll see is stable coins being traded you’ll also see a platform token like avalanche being traded against us dollars or ethereum being traded against many other coins so you can trade and pay fees on here but you can also put your coins on

and then some passive Income if you want to know more about how i use defy and dexes to actually earn passive Income i have step by step guides on this in my none;">Crypto investor course so i’ll leave that in the description it goes step by step through exactly what dex is to use how i use them and you can actually see my Portfolio and what i’m doing in real time in terms of earning passive Income and

you know where i’m actually putting those as well so i’ll leave that linked in the description but what you really want to do is provide Liquidity on these dexes to earn that Income you actually earn better Income from doing this than

lending out your tokens for the most part it does depend on which tokens you’re using but as you can see here you can use a decentralized exchange like curve and you get around two to seven percent if you want to use the avalanche blockchain and use a decentralized exchange like trader joe

you can get anywhere from two to fifty percent which is crazy and on binance marching you can use a dex like uh pancake swap and get around two to fifty percent really important though is that this can become quite complex and some Assets are much riskier than others and there is

something called impermanent loss i go over this in my Crypto course i would very much suggest you understand the risks of this before getting involved and i do have another CashNews.co on

dexes for free that i’ll link in the description that goes through what impermanent loss is and some of the considerations you need to go through before providing Liquidity on dexes the next thing users can do though is choose which blockchain that they actually want to use

think of each blockchain like a collection of market participants just like a bank has certain customers and certain banks have different types of customers so does each blockchain it’s a financial ecosystem with its own Liquidity and so you can choose it based on what

outcome you actually want so for example on ethereum ethereum is one of the most decentralized chains and it has very secure block space because the block space is seen as more secure it’s more expensive to transact on there now if you’re a big whale these fees don’t bother you

and so you’re probably going to use ethereum ethereum is where most of the Liquidity and trade is and so if you’re a whale that’s really important for you so you can use a decentralized exchange like curve

style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance or you can use a lending protocol like arvo ethereum also has layer 2 networks which inherit most of the security of ethereum but lower feet even though these are layer 2 networks on ethereum like zk sync right

here and arbitrarily they are completely separate networks with their own separate Liquidity so you don’t share the Liquidity between the ethereum base layer and the layer two networks each network has its own pool of Liquidity now you can

obviously trade from one network to another but Liquidity pools do stack up on each network so check which network is actually giving the most Liquidity and the best Yields at any given time on binance smart chain mostly pancake swap is the biggest

decks and you have venus right here which is a lending protocol each and every blockchain essentially will have its own main decks and own main lending protocol on the avalanche chain that is trader joe and on cardano you have a bunch of them like sunday swap and wing riders right here but each

blockchain will give you an option to add Liquidity to a dex but Liquidity is king as an investor when you’re an investor especially putting your own Liquidity on lending protocols or dexes you’re really looking for the best

Yields and so with a dex you’re looking for the most trade so you want to go to the biggest best most robust decentralized exchange that has the most traders and most people on there because that’s just more trustworthy and you’ll be getting more fees overall

trading volume is really important so when you’re looking at decentralized exchanges look for the most Liquidity and the trading volume overall over the long term you’re going to get a better experience and of course low fees is really important for most people because

if you’re not a whale you know trading around millions of dollars trading fees can eat away at a lot of the investment Yields that you get so low fees are important and trustworthy blockchains and tokens is a must keep to the you know the best highest quality blockchains um

and then you’re not gonna run foul of any kind of rug pools or anything like that just like in traditional Finance in dfi there are also service providers and

applications that build products that make our lives easier an example of this is a Yield optimizer or a Yield aggregator like beefy Finance

or yeon Finance and there are others as well but what these do essentially is just aggregate all of the Yields from d fire and show us them all in one

platform so that we can have an easier life so for example beefy Finance right here you can see them uh all of the Yields across all these different chains

bmb chain avalanche polygon arbitram uh moon river chronos chain and you can go down and see all of the different Yields for all of the different Assets so if you know what you want to invest in for example stable coins right here you can see all of the best

Yields and you can decide which one to go for so for example if i want to invest die i can get around a 53 Yield right now which is pretty crazy on the phantom blockchain on the platform which is this screen now do you want to do that well you may want to go for a

different chain for example something a little bit higher up the rankings that is potentially a little bit more trustworthy so you can come down here and choose something like polygon and quick swap which is a bit more well known obviously that’s just going to aggregate the

Yields for you and you have to do your own due diligence here but it takes your usdc it will find which chain has the best Yields and then go ahead and put them on the best decks which has the best Yields so to recap what is decentralized

Finance well it is actual Finance and economics

in a digital world disintermediating these horrible lot right here so you have money like a store of value bitcoin or an investment like an altcoin or actual dollars like a stablecoin you have platforms that enable the rules to be set smart contracts are fixed in code and cannot be changed on these

platforms and that enables applications to be built to allow us to trade with other people in a trusted way without having to trust the bank in the middle and then you have service providers which make everyone’s life easier so if you want to know how i actually invest in d5 and make passive

Income with Crypto i’ll leave my Crypto course in the

description it goes step by step through actually getting involved in the chain how to use wallets how to think about Assets and how to put a Portfolio together to actually earn some passive Income other helpful CashNews.cos i’ll list down in

the description as well i’m james with money cg cheers for watching and i’ll see you in the next one