Decentralised Finance (DeFi): Uniswap, Compound and others

Decentralised Finance (DeFi) is the cryptocurrency trend that has received the most attention in recent years.

The aim of DeFi is to provide financial services such as lending, borrowing and exchange trading, but in a decentralised way, i.e. without a central regulator.

DeFi's biggest advantage is that its services can be used by anyone with internet access, no matter where they live in the world.

No bank account is required to use DeFi platforms, and there are no credit or identity checks, making them potentially accessible to those who were previously excluded from financial services.

The Ethereum blockchain has become a hub for the development of DeFi applications, as it enables the creation of smart contracts with complex logic. Some well-known DeFi applications run on the Ethereum blockchain, including Uniswap and Compound.

Uniswap is a decentralised exchange (DEX) that allows users to directly exchange various ERC-20 tokens, cryptocurrencies created on the Ethereum blockchain, with each other. The advantage of Uniswap is that there is no need for a central organisation to conduct the trading, and there are no listing fees, so any token can be freely exchanged on Uniswap.

Compound is a decentralised lending platform where users can earn interest on the cryptocurrencies in their deposit account or borrow cryptocurrencies. Interest rates are determined by current supply and demand. The advantage of Compound is that the process of lending and borrowing is automated and does not require a third party, such as a bank, to handle it.

Both applications underline the key benefits of the DeFi movement: the democratisation of financial services and the elimination of the need for centralised organisations. However, DeFi still faces many challenges, such as the security of user data and regulation.