Decentralized Finance (DeFi) is a field that has the potential to disrupt the traditional financial industry through blockchain-based financial applications and services.

 

Today, the DeFi space has seen phenomenal growth over the past two years, with DeFi alternatives to many traditional financial services, and more products emerging rapidly.

 

Read on to learn the basics of DeFi, its potential, and how to add DeFi tokens to your portfolio with Binance.

 

What is DeFi?

DeFi is the abbreviation of Decentralized Finance, which refers to the financial application ecosystem built on the blockchain network. DeFi uses cryptocurrencies and smart contracts to provide transparent financial services that operate without any central authority. DeFi is open for anyone to join as long as they have a crypto wallet and some cryptocurrencies. Additionally, most DeFi ecosystems have their own tokens that power their unique native blockchain networks.

 

What are DeFi coins?

DeFi tokens represent a class of cryptocurrencies that are native to automated, decentralized platforms that use smart contracts. These coins give their holders access to a range of blockchain-based financial applications and services. DeFi tokens also have various utilities in their native network. For example, some DeFi tokens act as governance tokens, granting voting and governance rights to users who hold them, and in many cases holders can stake their tokens for rewards.

 

Why is DeFi important?

DeFi has the potential to create open-source, permissionless and fair financial markets that are inclusive and accessible to anyone with an internet connection. Transactions are transparent and verified by other users on the network. Furthermore, the data on the blockchain is tamper-proof, secure and auditable. Users can maintain full control over their assets and interact with the DeFi ecosystem through peer-to-peer (P2P), decentralized applications (DApps).

 

DeFi use cases

Here are some of the most notable ways people are interacting with DeFi today:

 

Lending: Open lending protocols make lending cheaper, faster, and available to more people. Furthermore, decentralized lending has many advantages. For example, you can settle transactions instantly, stake digital assets, and there are no credit checks.

 

Asset Management: Many DeFi protocols provide tools to help users manage their assets. Therefore, you can earn interest and rewards. Additionally, DeFi allows you to keep your personal data private.

 

Decentralized Exchanges (DEX): These platforms allow you to trade digital assets without the need for a trusted intermediary like an exchange to hold your funds. The advantages of DEXs include lower fees and users have full control over their assets.

 

Stablecoins: A class of cryptocurrencies that are tied to real-world assets to reduce volatility, stablecoins are closely related to the DeFi space. Since cryptocurrency prices can sometimes fluctuate rapidly, stablecoins allow users to lock in profits or avoid losses during periods of heightened market volatility.

 

Blockchain Gaming: Decentralized gaming is one of the more popular applications in the blockchain ecosystem. Popular game money-making DApps like Axie Infinity reward players with exciting gameplay and economic incentives, turning playtime into a revenue stream.

 

The benefits of DeFi

Flexible and fast

You can make transactions and move your assets anywhere you want without waiting for bank transfers or paying traditional bank fees. Additionally, transactions are real-time, and rates are updated multiple times every few minutes.

 

Permissionless and inclusive

One of the main benefits of DeFi is easy access to financial services. Anyone with a crypto wallet and internet connection can access DeFi services.

 

Transparent

Thanks to blockchain technology, DeFi data is tamper-proof, secure, and auditable. Every transaction on the blockchain can be seen and verified by other users on the network.

 

Users can maintain control over their assets

DeFi applications do not require any intermediaries or arbitrators. Users can maintain control of their funds at any time within the ecosystem through non-custodial crypto wallets or smart contract-based escrow — escrow holds deposited tokens until payment terms are met.

 

Top 10 Popular DeFi Tokens

DeFi coins provide users with a series of blockchain-based financial services. We have listed the top 10 DeFi tokens you can consider adding to your crypto portfolio:

 

Terra (LUNA) at $86.61 with a market cap of $29,733.48M*

 

Uniswap (UNI) at $7.98 with a market cap of $5,511.49 million*

 

THORChain ( RUNE ) at $7.49 with a market cap of $2,476.54 million*

 

Pancake Swap ( CAKE ) at $7.78 with a market cap of $2,260.08M*

 

Aave (AAVE) at $161.40 with a market cap of $2,211.75 million*

 

Klaytn ( KLAY ) at $0.74 with a market cap of $2,072.29 million*

 

Maker ( MKR ) at $1,502.00 with a market cap of $146.840 billion*

 

Convex Finance ( CVX ) at $24.14 with a market cap of $1,459.84 million*

 

Curve (CRV) at $2.63 with a market cap of $1,213.08 million*

 

Celo (CELO) at $2.66 with a market cap of $1,168.24 million*

 

*As of May 5, 2022.

 

* This list is ranked by market capitalization and does not constitute a recommendation or endorsement by Binance to buy or sell any currency.If you want to sign up at Binance you can get the Binance referral code.

 

How to Buy DeFi Coins on Binance in 2 Steps

Interested in buying DeFi tokens to diversify your crypto portfolio? Get started with Binance, the largest cryptocurrency exchange by trading volume and user base, in minutes. Follow the two-step guide below to buy DeFi tokens on Binance:

 

Step 1: Make a fiat deposit via Wallet Transfer or Binance Bank Transfer. Make sure to check the available fiat channels for your preferred currency. For more information, see our in-depth guide on How to Deposit USD via SWIFT

 

Optional: Convert fiat currency to BUSD or USDT so you can trade a wider variety of coins.

 

Step 2: Purchase via user spot wallet or use a credit/debit card to purchase the DeFi token of your choice.

 

in conclusion

Many technologies in the DeFi space aim to improve the traditional financial system. This has the potential to create more open, free and fair financial markets that can be accessed by anyone with access to the internet.

 

As innovations in the crypto and blockchain space continue to develop, DeFi applications will continue to evolve and improve their financial structures, potentially offering new products and services.

 

However, as DeFi is still in its infancy, it may still be prone to vulnerabilities. Always keep DYOR in mind before buying and committing any DeFi token.

 

Ready to start your crypto journey with Binance?

 

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Disclaimer: Cryptocurrency investments are subject to high market risk. Binance is not responsible for any of your trading losses. The statements in this article are for educational purposes only and should not be considered financial or investment advice.