Chris Ani

@iamchrisani

12 Tweets • 2022-01-15 10:08:04 UTC •  See on Twitter

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UNDERSTANDING DEFI WITH

CHRIS ANI
(A Series)
OUTLINE:
- Intro
- What is CeFi & DeFi
- The Pillars/Components of DeFi
- Advantages and Disadvantages of DeFi
- How to Make Money with DeFi
#DeFiwithChrisAni

Are we ready ?
Let's Go
A thread

Introduction here
What is CeFi & DeFi ?
To get a full understanding of what CeFi and DeFi
is, one needs to understand what makes
up a financial system.
A financial system is made up of various services
like money transfers (sending money to
one another), loans, saving plans, insurance,

and markets (trades) e.t.c.

Today, this system and all its services are
completely centralised. There is always an
authority (a company or a person) that controls and
offers these services.
Centralised Finance (CeFi) was the standard for
trading cryptos.

In CeFi, all trade orders

and funds were handled by a centralised exchange -
the central authority. You don’t own
your cryptocurrencies when buying/selling through
a centralised exchange. Also, you are
subject to the rules set by the exchange.
Decentralised Finance (DeFi) is a term used to refer
to blockchain applications that aim to
remove middlemen from all financial transactions -
banks, brokerages or centralised
exchanges.
Every DeFi protocol has three building blocks it
relies on to make it work:

1. Cryptography - A technique used to send secure

messages between two or more
participants. This guarantees the security of the
transactions and the participants,
independent of operations from a central authority.

2. Blockchain - A system of recording information

in a way that makes it difficult or
impossible to change, hack, or cheat the system. At
the moment, most of the DeFi
projects are built on the Ethereum blockchain.
3. Smart Contracts - An agreement between two
people in the form of computer code.
They run on the blockchain, so they are stored on a
public database and cannot be
changed. Smart contracts are the building blocks of
DeFi.

These blocks ensure that these financial services are

efficient, secure and free of any central
authority.

Let me know if you got value with this before we go

to the next part of the series which is Pillars and
components of Defi
Use this hashtag to retweet #DeFiwithChrisAni

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