Understanding of Some Key Decentralized Finance Concepts Simplified

DeFi is spreading its wings worldwide. The influx of individual and institutional investment proves it. This is taking BTC value to the next level continuously.

In a simple world, governments in all parts of the world are putting their best foot forward to explore the potential and application of cryptocurrencies in all walks of life.

Seeking proper education about this form of financial innovation could make your life easier.

You should scroll down to read the post till the end to learn about a couple of key decentralized financial concepts. The list includes but is not limited to the following only:

Decentralized Lending:

The emergence, acceptance, and application of this form of finance in all walks of life have revolutionized the financial industry (Traditional centralized financial industry) worldwide.

The interest of common users, governments, and institutional investors is reaching the next level faster. This is leading to the introduction of innovative concepts in this domain of finance. One of them is the concept of decentralized lending.

Decentralized Borrowing:

Money borrowed by individuals or businesses for interest through decentralized platforms/networks is called Decentralized borrowing.

This form of lending has its own place in this innovative domain of finance. It offers a special set of benefits listed below:

• Hedge funding.
• Earning interest by holding cryptocurrency assets.
• Leverage the potential of DeFi lending platforms.

The Platforms Used For Both These Domains of DeFi:

Both these domains of decentralized finance leverage the potential of multiple platforms to serve users. The list includes but is not limited to the following only:

• DApps (Decentralized Applications).
• Smart Contracts.
• Many DeFi Protocols.

All in all, decentralized borrowing is the concept of borrowing money for a business. You do not need traditional centralized financial institutes for borrowing money for interest or business investment.

In case you want to understand the way DeFi Lending and borrowing work, you will need professional’s advice.

Cryptocurrency Value Appreciation:

This is another key concept for every cryptocurrency enthusiasts to understand in-depth. What do you understand by cryptocurrency value appreciation?

Correct knowledge in this regard is mandatory for everyone thinking about making a profit in this domain of finance systematically.

Cryptographically secure and decentralized digital currency is called cryptocurrency. Value appreciation refers to an increase in the value of a cryptocurrency. In simple words, an increase in the price of a cryptocurrency refers to an appreciation of its price/value in the market.

The value of a cryptocurrency could appreciate because of many reasons. For example:

• The influx of individual or institutional investors.
• The inflation hedge.
• Halving.
• Stock-to-flow model.
• Increased acceptance in mainstream finance.
• Increased utilization, circulation, demand & limited supply, three basic rules of economics.
• Multiplication in the count of institutes investing in a cryptocurrency.

All of these factors collectively play their role in appreciating the value of a cryptocurrency in their own way.

Cryptocurrency Value Depreciation:

This is exactly the opposite of the concept clarified in the previous paragraph. In simple words, cryptocurrency value depreciation refers to a decrease in the value/price of a cryptocurrency in the market.

Concepts like heavy buying and selling, decreased utilization, circulation and demand & supply, dependency on a private blockchain, weak ecosystem development, and delisting, etc. depreciate the value of a cryptocurrency. The list of such reasons could be very long.

You will be able to make the right decision easily after seeking correct, reliable, and in-depth knowledge about it. Some research in this regard could be helpful for you.