Decentralised finance has around a dozen well established protocols that can be regarded as the “big banks” of Defi. The difference, of course, is that you don’t have to custody your funds with these projects, as you would when depositing assets into a bank account: rather, a Smart Contract controls the whole process. Provided the code is bug-free, your funds should be safe, with employees incapable of making off with your money.
Popular defi protocols include:
Maker: A stablecoin issuance and lending protocol. By staking assets such as ETH and WBTC as collateral, you can mint stablecoins known as DAI, which are collateralised against the locked crypto.
This provides a form of decentralised lending, and allows you to use DAI within defi for other purposes. Upon repaying the borrowed amount, you can claim back your staked cryptocurrency.
Aave: A decentralised protocol for lending and borrowing. Stake your assets and earn interest on your deposits. Aave also offers uncollateralised loans.
Compound: An algorithmically controlled protocol for earning interest on staked assets.
Yearn Finance: A decentralised hedge fund that invests staked assets into various defi protocols, and pursues yield-generating strategies to increase the wealth of its users.
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