DeFi is one of the words that most of us know and the majority of crypto holders know about it. DeFi is a way to earn decent returns on crypto by option the pool or farms and we also get a bunch of pools where we can stake our crypto and it helps us to earn more in form of crypto tokens. There is no benefit if we keep our crypto idle but if we can use it on DeFi then it can generate some income on this and its a nice example of passive income.
I got to know about DeFi this year and my first ever Defi is CUBDeFi. I used to think that it's risky and this is why I was maintaining a distance from this but with CUB I made my debut in DeFi. I did some study and went through many posts and videos to enhance my defi understanding. While I got a better understanding of decentralized finance and now I get to see about DeFi 2.0 and this is another new thing for me. We know that things change or upgrade so this new version will bring an even better solution for investors. Financing is all about using our money better and that too in such a way that it can generate a higher amount of returns with a sustainable model.
What is Defi 2.0 -
IN simple words its upgrades the version of decentralized finance which will offer many new things that were not available yet. With this upgraded version we will get more scalability, security, sustainability, and more security so that there is less risk of losing funds because of hacking issues.
DeFi 2.0 is a movement of projects improving on the problems of DeFi 1.0. DeFi aims to bring finance to the masses but has struggled with scalability, security, centralization, liquidity, and accessibility to information. DeFi 2.0 wants to combat these and make the experience more user-friendly.
We have seen in the past when hackers were able to hack the pool which is not a good thing but with this version, it seems this will be addressed up to an extent. Obviously its difficult to say that it will be hack-proof because its not possible however we can surely expect more security in the place.
What makes DeFi 2.0 better?
A new version brings some fixes that we have seen earlier and the same we can get fixed with the newer version. So let's see what we are going to get with the upgraded version-
Defi runs on smart contracts with predefined rules and Its difficult to understand the entire contract unless you are a developer. Since we can not evaluate the entire smart contract so we don't know if there is something because of that it can be compromised. As of now if a smart contract is compromised then we can lose our money but Smart contract insurance will help and it will pay us with some fee. By paying this small fee we can stay rest assured that our money will be lost.
Impermanent loss is one of the situations that happen when we do farming with 2 coins and when the value of the coin drop drastically then we may have to face the loss on it. It happens when the ratio of both tokens in the farm change. Platforms are exploring the possibility to reduce the risk and we can expect some solution to overcome this problem.
Self-repayment of Loans is another good thing that we can expect with this. Crypto lending is a growing service and there is some platform that is offering this against collateral and they provide loans up to a certain percentage. Now when we take a loan from the crypto lender then we need to deposit out crypto and it is returned only when the outstanding is paid. During this period our collateral does not earn any returns but now this will not be like this. Now with defi 2.0, we enhanced the version of crypto lending. For example, if you take a loan of $500 and provide collateral of the same value. The lender will use this crypto to earn interest and this will be paid off against the loan. Once the lender earns $500 and some extra income on this then your crypto (collateral) will be returned. This sounds great, Isn't it? This way we can get our loans paid off earlier and surely a good way to get loans.
These new things with defi 2.0 are going to be exciting and we will have an even better investing experience. DeFi has already created a lot of earning opportunities and soon things are going to be great so I am looking forward to having it soon on cub defi as its announced recently.
Thank you so much
Stay Safe
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