Do you often hear the term DeFi but find it complex and distant? Don't worry, today Onchain View will help you understand DeFi in three minutes in the simplest way and remind you of the risks to watch out for!
What is DeFi?
DeFi stands for Decentralized Finance, which means decentralized finance. You can think of it as a financial world without banks or intermediaries.
💡 Decentralized: Refers to a system not controlled by a single organization or individual, but maintained by many participants.
In the world of DeFi, all financial services (such as lending, trading, saving) are automatically executed on the blockchain through smart contracts, allowing everyone to participate freely without the constraints of the traditional financial system.
💡 Smart Contract: Automatically executed code that completes a pre-set agreement when specific conditions are met.
What are the risks of DeFi?
Although DeFi is full of potential, newcomers must pay attention to the following risks:
Smart Contract Risks: The code may have vulnerabilities that hackers can exploit.
Market Volatility Risks: Many DeFi token prices fluctuate wildly, which may lead to asset depreciation.
Operational Risks: Unfamiliar operations may lead to asset loss.
How to safely experience DeFi?
Start with Binance CEX: You can first learn the basic operations on centralized exchanges (CEX) like Binance and understand how cryptocurrencies operate.
Start with small investments: Start with a small amount of funds to experience it, and never invest more than you can afford to lose.
Which part of DeFi are you most interested in? Share your thoughts in the comments or forward it to friends around you to learn together!